A: Setting up relationships with companies who will ship merchandise directly to your customers for you--drop-shippers, as they're called--is an excellent way to start your e-business and, if done properly, doesn't have to be a costly endeavor. There are literally hundreds of companies out there that will drop-ship products for you, everything from gifts and house wares to power tools and furniture.

In a nutshell, here's how drop-shipping works. You set up an account with a drop-shipper (or multiple drop-shippers who offer different kinds of products) who provides merchandise that you can sell on your Web site. The drop-shipper typically supplies you with images and product descriptions that you can use to build your online store or feature on static HTML Web pages. (You can locate drop-shippers with our e-book The 2006 Guide to the Top Dropship & Wholesale Companies.

When a customer places an order for the product on your site, he or she pays you for the product. You, in turn, place the order with the drop-shipper and pay them for the product. The drop-shipper then ships the item directly to your customer under your company name. To your customer's knowledge, the product was shipped by you.

Drop-shipping offers many advantages to the shoestring online startup. You don't have to pay for an item until it sells, and your customer pays you, so your personal cash outlay for the product is zero. You never have to handle or warehouse the merchandise, as order fulfillment is handled by the drop-shipper. You can also offer a wide variety of items from multiple drop-shippers, and your end customer is none the wiser.