Dropshipping is a retail fulfilment method. The store owner doesn't keep the products in stock to sell on his website. Instead he get the products data from the manufacturers or the wholesalers directly or by using a third party. When a store sells a product, it purchases the item from a third party and handovers the shipment process. The wholesalers or the manufacturer will ship the product to the customer. In the whole process the store owner never sees or handles the product.
The major difference between dropshipping and the standard retail fulfilment method is that the selling merchant or the store owner doesn't keep any stock or doesn't maintain any warehouses. Instead, the merchant or the store owner purchases inventory when needed from a third party means the manufacturers or the wholesalers to fulfill the order.