Drop Shipping versus Order Fulfillment Service

Posted: March 10, 2012 in Uncategorized
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Today, businesses have different options to get their products into buyers’ hands. Order fulfillment service and drop shipping may appear pretty confusing for suppliers these days. To decide which method suits your business, here are the advantages and disadvantages of each.

Order fulfillment

It is the process by which a certain manufacturer or retailer picks, packs items and ships them to the buyers. Order fulfillment can be done in house or through a third party warehouse like Shipwire.

Pros: better inventory control, increased margin, less stock outs

Cons: needs space, inventory investment

Tip: Save money by partnering with a third part warehouse rather than renting an entire warehouse outright.

Drop shipping

Drop shipping is a kind of order fulfillment service where the retailer doesn’t hold any merchandise at stock. With this process, the buyer orders are directly sent to the wholesaler or manufacturer, which then ships the items to the buyer after they have completed a purchase from the retailer.

Pros: more flexible, hassle free, lower inventory investment

Cons: more online competition, lesser discounts, reduced product availability, tedious returns processing

Tip: There are plenty of drop ship suppliers that impose conditions to retailers such as sales conditions, minimum price controls, return conditions and so much more. Take your time reading and understanding the terms before tying up yourself in a contract.


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