What characterizes drop shipping in retail fulfillment?

Drop shipping in retail fulfillment is characterized by the retailer directly transferring orders to the supplier. In this model, the retailer does not hold any inventory themselves; instead, they rely on suppliers who fulfill customer orders on their behalf. When a customer places an order, the retailer forwards the order details directly to the supplier, who then ships the product directly to the customer. This process allows the retailer to offer a wider range of products without the financial burden and logistical challenges of storing inventory.

In contrast, the other options describe traditional retail practices where the retailer is involved in managing inventory, fulfilling orders themselves, or handling customer returns, none of which are aspects of the drop shipping model. In drop shipping, the focus is on streamlining the supply chain by minimizing the retailer's involvement in inventory management.