February 25, 2010
Some of you may be asking, exactly what are the benefits of drop shipping and/or outsourced order fulfillment? And which one is better to use? The answer to that question has a lot to do with whether you prefer or need to hold merchandise in stock or if you prefer not to sit on inventory.
If you prefer to hold inventory then “Order Fulfillment” would work well for you. “Order fulfillment is the process by which a retailer or manufacturer picks, packs and ships an order to an end buyer.” So this means that your order fulfillment can be done directly by you via your garage or warehouse or better yet through a third party by leveraging outsourced order fulfillment (like Shipwire) that can perform all your storage and fulfillment needs with just one simple and easy to use account. Shipwire offers a Free Trial if you want to test outsourced order fulfillment.
If you do not want to invest up front in holding inventory in your garage or warehouse then “drop shipping” could be your better option. “Drop Shipping is a type of fulfillment, whereby the retailer does not hold any merchandise in stock.” Merchants using “drop =shipping” typically send orders directly to their manufacturers/suppliers who then ship to the buyer. “In other words, the supplier/manufacture is trying to make it easier on the retailer by allowing the retailer to sell the product without investing in inventory.”
If you are interested in knowing more about Drop Shipping versus Order Fulfillment read this article by Skip McGrath.
If you are a product manufacturer or supplier who wants to know how to offer your retailers drop shipping please check out this article by Nate Gilmore on Practicalecommerce.com called “Manufacturer and Supplier Drop Ship Demystified”.