What is Drop Shipping?
Drop shipping, also known as direct-to-consumer (DTC) orders, is a fulfillment service that has become a necessary capability for suppliers. It’s an inventory and supply chain management method in which the retailer offers a product for sale but doesn’t keep goods in stock. Instead, the order information is sent to a third party (usually the supplier) for fulfillment and shipment directly to the customer.
How Drop Shipping Works Drop shipping allows suppliers of all sizes to expand into retailers that may otherwise may not have been open to their product(s). It’s an opportunity, but when the first order arrives, many ask if it will be worth it.
After surveying more than a hundred drop ship suppliers about their experience, they offered insight into how they managed the transition, what investments performed best, and when they engaged with logistics providers or automated to scale.
SPS Commerce conducted a research study to identify how vendors approached, prepared for, and automated for their first drop-ship order and beyond. The online survey included 146 respondents from North America that were validated as suppliers actively using a drop-ship fulfillment service model in 2018.
Advice from Survey Respondents:
- Prepare as drop ship orders happen quickly after signing with a retailer.
- Automate to manage order volumes and complexities.
- Consider a 3PL to provide scale.
- Recognize drop shipping as a growth opportunity for your business.
