What is Drop Shipping?

dropshippingDrop Shipping – In its most basic form, drop shipping allows retailers to sell items without keeping them in stock. This is an especially favoured method for online sellers, as they’re able to offer a wide-variety of products to consumers without the costs of physical storage. The most common way e-commerce retailers utilise drop shipping is by selling products on their website, and then having their distributor or wholesaler handle order fulfilment.

Increasingly, however, even retailers who do deal with physical stock are choosing to use drop shipping for order fulfilment. This process keeps their products and goods stored in a safe and secure third-party warehouse until they are ready to be sent out. And through the utilisation of this strategy, physical retailers are able to eliminate the expenses of managing inventory in-house, while still maintaining control over the fulfilment process.

It’s interesting to note that wholesalers and distributors also often keep their products in a third-party warehouse. This creates a really expansive supply chain sequence, as is illustrated below:

Retailer Makes A SaleWholesaler/Distributor Receives Receipt – Wholesaler/Distributor Sends Order To Third Party Warehouse – 3PL Processes, Picks, Packs, and Ships The Order

So when drop shipping can involve so many steps, you may be wondering…

Why Should I Consider Drop Shipping?

There are actually several reasons why most businesses will want to consider adding drop shipping to their distribution mix:

  1. Your supply chain becomes simplified. There’s no longer any management of physical inventory. Instead, a shopper simply makes a purchase, the order gets fulfilled, and it shows up at the customer’s door. And as long as you work with a reputable 3PL for your drop shipping needs, you’ll still be able to track and monitor all phases of the fulfilment process.
  2. It saves you money. Related to the first reason – not having to manage product fulfilment means fewer resources being spent on facilities, labor, and transportation. These reduced costs can add significant revenue to your bottom line.
  3. It makes product fulfilment faster. If you’re working with a reputable and well-established provider, products can be quickly sent out to consumers. NPF, for example, offers on-demand drop shipping, with guaranteed 24 hour turnaround time between receipt of order and when it goes out for delivery.
  4. You retain brand visibility. Your orders can still be shipped with a customised packing slip, keeping your brand’s name first in the minds of your customers.

At the end of the day, drop shipping is changing the way logistics get done. It doesn’t matter if you’re an online retailer, direct seller, distributor, or manufacturer – drop shipping has advantages for almost all businesses that participate in the supply chain cycle.

If you have any more questions about drop shipping, how it works, or the ways it may benefit your business, feel free to give NPF a call at: 1300 882 318, or contact us here.

Lerablog.org also has some useful information about the importance of Drop Shipping.