In a world of growing e-commerce, knowing what is dropshipping fulfillment can work wonders for your business. The process began in the late 1920s but became less prominent due to the great depression. Dropshipping then saw a resurgence in the 1950’s due to mail-order catalogues. These publications contained a list of a company’s products that customers could order from and ship directly to them. It wasn’t until the 1990s that the internet boom led to international popularity in dropshipping fulfillment. Buyers transitioned to e-commerce from traditional brick-and-mortar stores. As customers started to purchase goods online, sellers began seeing the advantages of using dropshipping for their company.
What is Dropshipping Fulfillment, and What is the Process?
Dropshipping fulfillment is a business model where retailers can sell their products without keeping inventory. The seller has a 3PL (third-party logistics) provider that handles the process of order fulfillment for them. 3PLs maintain the inventory for the seller and may have warehouses for storing and moving the goods to the customer. While dropshipping has been around for longer than the 1990s, e-commerce has changed how sellers view this business strategy. Businesses had an increase in customers from other countries and grew their supply chains internationally.
The overall process of dropshipping fulfillment starts after a seller creates an online store. Once a customer orders a product, the store sends a message to the dropshipping supplier. The supplier is the 3PL warehouse storing the product and will prepare the goods for shipping. Once ready, the supplier will ship the product directly to the customer. During the journey, the seller may provide tracking information so the customer can track the shipment.
Benefits and Challenges of Dropshipping Fulfillment
The reason why dropshipping has grown in recent years is due to the benefits it has on a supply chain. A significant advantage is the low startup cost that a seller can have when using dropshipping fulfillment. Retailers or individuals usually have to pay a lot of upfront investments and have capital for inventory-storing warehouses. If the seller uses dropshipping for an online store, there are no location limitations, and the supplier can ship internationally. The seller can offer a variety of products due to the fulfillment capabilities of a warehouse. Scalability also becomes easier since suppliers can accommodate increasing orders.
While dropshipping has many benefits, there can also be challenges when using this business model. A common drawback is that inventory issues are more likely to happen when sourcing from a warehouse. Tracking which items are in and out of stock becomes more challenging. Supplier errors may also occur, for which the customers will hold the seller responsible. An example is if the products get damaged during the journey to the final destination. It is crucial to choose a trustworthy supplier when starting dropshipping fulfillment.
A1 Worldwide Logistics
Talk to a 3PL provider like A1 Worldwide Logistics to learn more about dropship fulfillment. Along with fulfilling your orders for your customers, we have a customs-bonded warehouse to house your products. A bonded warehouse is a facility where importers can store freight for up to 5 years without payment of duties. This allows the importer to save money and look for customers before they have to pay taxes for the shipment. Contact A1 Worldwide Logistics at 305-821-8995 to learn about our many solutions for your supply chain. Along with warehousing, we transport your goods to and from our facility to the final destination.
