Introduction to Drop Shipping Integration - Working, Process and Benefits

What is Drop Ship?

Drop-shipping is a fulfilment method where retailers do not carry the products in their stores or warehouses. Orders ship directly from the vendors.

In other words, a drop shipping business is when an owner finds a list of suppliers to supply products for their website to market and sell. However, instead of the business owner holding the inventory, there is a third party that handles all the shipping as well as logistics for the original business holder. This third party is typically a wholesaler, who “Dropships” the product to the customer on behalf of the business itself.

At the most basic explanation, every time some customer buys a product, the wholesaler — who typically manufactures the product — ships that product, and you get a portion of that sale for marketing the product.

How Drop Shipping helps can be understood from below mentioned points as to how, as per its details, is beneficial:

• Offer more products without the need for excess inventory
• Test new products without bringing it to inventory.
• No excess capital tied up in stock.
• There won’t be any payments for storage and associated bills of storing inventory.
• With Drop Shipping, there won’t be any need to pay for a warehouse or related equipment & staff.
• The need to receive stack, store, pull, pack, or ship products ends with Drop Shipping.
• The average profit of manufacturer is higher than a manufacturer who uses traditional channels.

Benefits of Drop Shipping

Below mentioned are the benefits of Drop Shipping:

• Drop Shipping is easy to Start
• Drop Shipping is easy to Grow
• Drop Shipping does not demand a lot of investment.
• Drop Shipping is Flexible
• Drop Shipping is easy to manage.
• Drop Shipping can provide wide selection of products to sell.
• Drop Shipping helps easy scalability.

Is Drop Shipping Profitable?

There are multiple ways to start & thereafter expand a drop shipping business. With that, few of the people who started drop shipping businesses are making a few extra hundred bucks per month, while few others have grown in huge multiple six-figure stores. Whether one is looking to start a drop shipping as an introduction of their business into ecommerce or a business model specifically that lasts forever; it is very important to understand how it can be profitable to you for your requirement.

Drop Shipping Process

The whole process of Drop shipping is a well-planned 10-step process:

1. Purchase – Customers makes an order at the retailer’s website.
2. Order Confirmation – Retailer sends an order confirmation email to the customer.
3. Order Routing – Retailer routes the order to the product vendor, typically via a purchase order.
4. Vendor Acknowledgment – Vendor acknowledges the order.
5. Branded Packing – Vendor prints a branded packing slip, customized to retailer’s specifications.
6. Fulfilment – Vendor Picks, Packs & Ships the order directly to the customer, avoiding transit through the retailer’s distribution channels.
7. Advanced Shipment Notice – Vendor generate a shipment update along with a tracking number and sends it to retailer.
8. Shipment Confirmation – Retailer sends an order shipped update email to customer.
9. Invoice – Vendor sends an Invoice to the retailer.
10. Receipt – Customer receives merchandise bought online at retailer’s website.

EDI/Automation documents for Drop Shipping

For all EDI processes, there are set of pre-defined or rather standard Documents. For Drop Shipping as well, there is a set of EDI documents that is helpful for the process to take place smoothly.

For Drop Shipping the documents include:

EDI documents – 832, 846, 850, 855, 860, 865, 810, 856, 870 and 180.

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