Internet retailers pursuing a drop-shipping strategy exhibit unique attributes that make them an ideal context for the investigation of this relationship. First, operational costs are clearly delineated at the transaction level, since each product sold to customers carries a cost previously negotiated through pricing agreements with the suppliers. Nevertheless, because drop-shipping is based on inventory sourcing and delivery from suppliers’ facilities, the existence of a variety of sources of inventory located across multiple suppliers can cause implicit fulfillment services to vary considerably (Coyle et al., 2003 and Karpinski, 1999).