In the dropshipping process, the online seller doesn’t keep the products it sells in stock. Instead, when a customer buys some items from a store, the store purchases the item from a third party and has it shipped directly to the end customer. As a result, the merchant never handles the products it sells.
The major difference between dropshipping and the standard retail method is that the selling merchant doesn’t keep the products in inventory. The merchant purchases inventory when required from a third party – usually a wholesaler or manufacturer – to fulfill customers’ orders.
In this setup, the seller doesn’t need to invest in purchasing inventory for its e-commerce business. In this case, the manufacturer will charge the seller a higher wholesale price for each product, in exchange for handling the warehouse and shipping individual orders rather than shipping to the seller in bulk. Although the e-commerce seller does not any product in stock, on the seller’s website it looks as if they are selling their own products. The seller handles everything from the marketing of the products and to the customer handling, while the manufacturer provides warehouse and shipping services.
The process for dropshipping is as follows:
1. Show items offered by one or more drop shipping companies in your online store.
2. A customer chooses the product and places an order in your store.
3. You forward the order to the manufacturer for handling the shipment of the order to the customer.
4. The manufacturer processes the order and ships it directly to your customer.
With this kind of retail fulfillment method, the seller doesn’t need to purchase the inventory and keeps it in the stock. This is a key feature of using the dropshipping process for e-commerce businesses.
Drop Shipping is a great option for sellers who do not have enough capital to buy their own inventory, or who don’t want to handle warehouse and logistics related work. You can also place a wider selection of products using drop shipping for your business. It can also be a low-risk way to test new products before you bring them into inventory.
Choose Drop Shipping or Third-Party Fulfillment for Your Ecommerce Business?
Dropshipping and third-party fulfillment are different e-commerce business models. Both involve an outsourced order fulfillment process, but the services provided by drop shippers and fulfillment centers are quite different.
Dropshipping and third-party fulfillment fulfill different needs for e-commerce sellers. Your business may choose to outsource order fulfillment to both of these types of providers at different times, depending on your business needs.
Call Tenaxx Logistics for Your Order Fulfillment Services
Want to find out more about our order fulfillment services? Contact Tenaxx Logistics today by filling out our online form or call us at 519-260-2738 and let us know what your business requirement. We’ll talk to you about possible shipping requirements and give you an accurate estimate for the services you need.