I can get way up in the clouds on this one.

Fluctuation is a natural part of the SERP. I would say this increases with the less domain authority you have relative to a search query. If your domain is not as strong as those ranking in the top results, Google may have less trust in your site, and thus move it around a lot more to see how it performs. The fact that you are jumping around on pages deeper than the 1st 2 leads me to believe that your domain authority is not competitive enough for the keywords you are monitoring.

We know that Google and Bing both measure CTR. It could be one indication to how relative a site's content is to a search query. Google may drop a site in a new spot, measure the CTR, and see if that site is more relevant than most sites that fall into that position.

Ultimately try to pay more attention to ranking averages - focusing on the jumps my drive you mad.

Good luck.

Are these dropshippers people who have to obey by your agreements in order to continue doing business with you? Would it hurt your business to create a requirement that they either create unique content or have their pages use the noindex code to prevent google from finding the dupe?

Do most of your dropshippers get their traffic via Organic Search? Or are they using other advertising sources?