Dropshipping Fulfillment: The Complete Guide (2024)

Drop shipping fulfillment allows ecommerce businesses to fulfill order demand without the costs and risks of holding inventory.

how Drop Shipping What is fulfillment and how can you get started? This guide will tell you exactly that.

What is dropshipping fulfillment?

Drop Shipping Accomplished This refers to a company not keeping inventory of the goods it sells. Dropshipping Business After a sale, a merchant outsources packaging and shipping to a third-party fulfillment service, which then dispatches the product to the customer, without the merchant having to handle the goods directly or manage the supply chain.

In most cases, there are three players that make up the dropshipping supply chain: the manufacturer, the wholesaler, and the retailer.

Maker

Manufacturers make products, but most of them don’t sell directly to the public. Instead, they sell in bulk to wholesalers and retailers. Buying directly from a manufacturer is the cheapest way to purchase products for resale, but you’ll almost always have to meet minimum purchasing requirements. You’ll also need to stock and reship the products when you sell to customers. For these reasons, it’s often easier to buy directly from a wholesaler.

Wholesaler

Wholesalers buy products in bulk from manufacturers and sell them to retailers at a small markup for resale to the public. If there is a minimum purchase quantity, it is usually much lower than what the manufacturer requires. Wholesalers usually stock products from dozens, or even hundreds, of manufacturers and tend to operate in a specific industry or niche market. Most are strictly wholesalers, meaning they only sell to retailers and not directly to consumers.

Retail company

A retailer is someone who sells products directly to the public at a marked-up price. If you run a business that fulfills orders through a dropshipping company, you’re a retailer.

The benefits of dropshipping fulfillment

Dropshipping fulfillment allows you to offer a variety of products in your store without a supply chain. DSers, AliExpress Dropshipping Partners can list their products on their store with just one click, at no additional cost.

Low capital requirements

With dropshipping fulfillment, you don’t need to purchase products up front, which makes it a cost-effective way to start an ecommerce store or expand your product offerings without investing thousands of dollars in inventory up front.

Easy to get started

You also don’t have to deal with physical goods – dropshipping suppliers have their own fulfillment centers that pack and ship customer orders, so you don’t have to worry about that. Inventory control Or manage your inventory levels. All you need to get started is a laptop.

Low Expenses

Your overhead costs are low because you don’t need to invest a lot of money at the start. Many dropshipping stores start off as a home-based business idea that grows into something much bigger.

More scalable

With traditional retail, you have to manually receive, process, pack, and ship every order — a daunting task for a small team. With dropshipping order fulfillment, your supplier does all that for you, so you can sell on any marketplace or channel, as much as you want, without falling behind.

Diversity of products available for sale

As a dropshipping retailer, you’re not limited to the products you can sell. If your supplier has new products in stock at their fulfillment center, you can sell them in your store at no extra cost.

Common challenges with drop shipping

Dropshipping businesses face a variety of challenges. While every business has similar goals, some struggle with finding good suppliers, others have issues with delivery, but either way, there’s always one area you can improve on to turn your dropshipping business into a revenue stream.

Low profit margins

Low profit margins are a major challenge for many drop shippers operating in a highly competitive market. Dropshipping NicheBecause it’s easy to get started, your competitors can sell products at lower prices and increase their revenue through sales volume rather than quality. Start a dropshipping businessthey can afford to operate with small profit margins.

Supplier Challenges

Even the best dropshipping suppliers make mistakes when fulfilling customer orders. It’s your job to take responsibility and apologize for those mistakes. A poor fulfillment partner can wreak havoc with lost products, mishandled deliveries, and poor packaging. If you work with multiple fulfillment centers, as many dropshippers do, fulfilling orders becomes even more difficult.

It’s important to find a dropshipper you can trust to fulfill your orders. Evaluate your options. Check reviews on supplier sites like DSers. Here are the main things to look out for when choosing a good supplier:

• Fair Fees
• Low minimum order amount
• Expertise
• Customer Support
• responsiveness

If you can find a supplier that meets the above criteria, then you’re likely to have a good dropshipping fulfillment experience.

Bad unpacking experience

For online businesses, shipping and fulfillment is the most direct touchpoint and connection with customers. Customers can’t touch or feel the product before purchasing. The unboxing experience is where you can create a memorable experience and differentiate yourself from your competitors. This is also a common challenge for many drop shippers.

Delivery issues

Delivery times and delays are common in dropshipping fulfillment. Depending on the destination country, delivery can take up to 60 days.

Shipping from your own country is one way to reduce shipping costs and complexities. Some dropshippers solve this shipping problem by buying products wholesale and hiring a fulfillment center in the destination country, allowing them to deliver orders in days instead of months.

Dropshipping Fulfillment in Practice

Let’s explain how a dropshipping order is processed for a fictitious store, Phone Outlet, an online retailer that specializes in smartphone accessories. Phone Outlet dropships all of its products directly from the fulfillment center of a wholesaler called Wholesale Accessories.

1. A customer places an order on Phone Outlet

Allen needs a new phone case and places an order through the Phone Outlet online store. After the order is approved, the following happens:

• Phone Outlet and Allen will receive a (presumably identical) confirmation email for the new order, automatically generated by the store software.

• Allen’s payment is captured during the checkout process and automatically deposited into Phone Outlet’s bank account.

2. Phone Outlet places an order with its supplier

This step is usually as simple as Phone Outlet forwarding your email order confirmation to a Wholesale Accessories sales representative. Wholesale Accessories has a Phone Outlet Registered credit card Charge wholesale prices for your items, including shipping and handling fees.

Notes: Some advanced fulfillment centers support automatic order uploads via XML (a common format for inventory files) or the ability to place manual orders online, but email is the most common method of ordering. Dropshipping Suppliers Because it is universal and easy to use.

3. Wholesale Accessories ships your order

If the item is in stock and the wholesaler is able to charge Phone Outlet’s card, Wholesale Accessories will pack the order and ship it directly to the customer. Although shipping will come from Wholesale Accessories, the return address label will have Phone Outlet’s name and address, and the invoice and packing slip will have the Phone Outlet logo.

Once shipped, Wholesale Accessories will email Phone Outlet an invoice and tracking number.

Notes: The turnaround time for dropshipping orders is often faster than you might think. Most reputable suppliers can fulfill orders in a matter of hours, so merchants can advertise same-day delivery even when using a dropshipping supplier.

4. Telephone outlet notifies customer of shipment

Once the tracking number is received, Phone Outlet will send the tracking information to the customer using an email interface built into the online store interface. Once the order has been shipped, payment has been collected, and the customer has been notified, the order fulfillment process is complete.

Phone Outlet’s profit (or loss) is the difference between the amount it charged Mr Allen and the amount it paid Wholesale Accessories.

Processing returns as a drop shipper

Returns become more complicated when dropshipping suppliers are involved. Different suppliers have different return policies. Some don’t allow returns at all, while others charge hefty restocking fees. You might have to pay shipping to return a faulty item. It all varies. Either way, your customers are coming to you for returns. And you need to make sure returns are an easy experience for them.

Fulfillment services aside, here’s what the returns process for drop shippers looks like:

1. The customer requests a return.

2. Request an RMA (Return Merchandise Authorization) number from your supplier.

3. The customer returns the goods to the supplier with the RMA number written on the address.

4. The supplier will credit your account with the wholesale price of the item.

5. Refund the full amount of the item to the customer.

There’s no right or wrong way to handle returns as a dropshipper, and some ecommerce businesses even offer “return-free refunds,” meaning they give customers a full refund without having to return the item.

Write it out RETURN POLICY Put it on your website and show it to your customers. It will build trust with them and encourage them to buy. Shopify’s Return Policy Generator It’s quick and easy to create.

Fulfillment companies are invaluable

Despite their vital role in the order and fulfillment process, drop shippers are completely invisible to the end customer. In the example above, once the package is received, only Phone Outlet’s return address and logo is on it. If Allen receives an incorrect case, he contacts Phone Outlet, who works behind the scenes to coordinate with Wholesale Accessories’ fulfillment service to send out the correct item.

With dropshipping fulfillment, the process of stocking your products and shipping your orders is managed by the fulfillment service from start to finish. With third-party fulfillment, you don’t have to worry about inventory management, so you can focus on the things that help grow your online business, like marketing, website development, and customer experience.