There are many different ways to sell products online, and sometimes, you don’t even need to have the items that you are selling within your home. Drop shipping is this particular method, wherein a third party handles all of the shipping so that you do not have to.
Order fulfillment is when you yourself pack and process the orders, and ship them out to the buyer. Both of these are valid selling techniques, and you can build lucrative businesses around both of these ideals, should they be executed correctly.
Drop Shipping vs. Order Fulfillment
When drop shipping is utilized by a seller, the seller actually does not hold any of the merchandise within their own place of business. The orders from the buyer are sent directly to the manufacturer of the items, or sometimes a retailer that has the items in stock, for processing once the purchase has been made. Commonly, you see this practice used with eBay or Amazon sellers, or even mail-order catalogue sellers.
This is because these sellers have such a large volume of stock or business that they themselves cannot process all of it themselves, and need the third party involvement to help them process their orders.
Order fulfillment, on the other hand, is where the actual transaction is handled directly between two people, and the seller themselves processes, packages, and ships the item to the buyer. That being said, there are certain third-parties that are called order fulfillment providers. Shipwire is one such example, but there are other Shipwire alternatives on the market as well.
The Pros and Cons of Drop Shipping
Drop shipping can both help and hinder your business. For example, a common hindrance of drop shippers is a buyer placing an order for an item that your third party retailer no longer has in stock. This can cause dissonance between you and your client, and you are the one that will have to field the complaint and also suffer the potential blow to your reputation.
That being said, there is the advantage of the lower inventory investment, and it is very hands off work for you. You can also have great inventory flexibility, and be able to try out many new lines of products before settling on just one with little risk involved on your part.
The Pros and Cons of Order Fulfillment
The biggest advantage to order fulfillment is that you have far greater inventory control. You will know exactly what is in stock for your buyers, and be able to control your online listings of products in a far more precise and exact manner.
The main disadvantage is being able to store all of your inventory, as well as the greater investment in having to stock large amounts of your inventory so that you manage it for yourself rather than have a third party’s involvement within it. Alternatively, you can partner with a third-party warehouse, and save yourself the cost of storage and renting a warehouse outright.