Drop-shipping means while delivering the goods, you don't deliver it from the stock, but instead you place an order to supplier (purchase order) and ask them to directly delivery those goods to the customer. So goods doesn't physically comes to your warehouse/company and directly gets delivered to customer from supplier. When the purchase order (which will automatically gets created from the sales order) gets received the sales order automatically gets into the "Done" state.

For configuring it in Odoo, following are the steps:

1./ Install Drop Shipping Module.

-On installation it will create a new picking names "Dropship" where you will find the default source location as "Supplier" and default destination location as "Customer"

-Also, it will create route which will have a pull rule from Supplier -> Customer

2./ Under the Settings -> Configuration -> Sales -> Sales Features - Select the option "Choose MTO, drop shipping,... on sales order lines", which will allow to select the route on the sale order lines while creating the sales order.

3./ Now, for testing create a product and do the following configuration

-Under the route select "Make to order"

-Define the supplier for the product

4./ Create the sales order and while entering the sale order lines select the route as "Dropshipping" and confirm it, which will generate the purchase order based on the route, for the supplier defined in the product's supplier info. When you will receive goods in the purchase order, it will take the sales order into the done state. Now you will able to see a button labeled "View Delivery Order" which will take you to delivery order with name prefix as "DS..."

In the purchase order generated, check under the "Deliveries and Invoices" tab, you will find the destination location as "Customer" location.

Note:-

Also, under the Purhcase configuration from setting, if you check the option "Routes - Manage Dropshipping", it will install the dropshipping module.

Hope this helps!!.