Drop Shipping EDI for Retailers and E-Commerce solutions

Are you looking for a full-service EDI provider that can automate dropshipping? Tired of waiting for your suppliers to manually implement their P/O Acknowledgement and ASN for drop ship? When done right, drop shipping for retailers has the power to vastly increase product offerings, test products in new markets, cut shipping costs and wow consumers – all with little capital expense. Learn how drop ship for an e-commerce solution works, how to get started and what benefits your business can expect.

What is drop shipping?

drop ship

Verb (used with object), drop-shipped, drop-shipping.

To send purchased goods directly from the vendor or manufacturer to a customer or retailer with no intermediate distributor, but billed through a third party.

Drop Shipping Program

How drop shipping for E-Commerce solutions work:

Drop shipping, or direct-to-consumer fulfillment, is an e-commerce order fulfillment model that allows a retailer to send a purchase order directly to a vendor once a customer places an online order. The vendor then fulfills the order and ships from their location on behalf of the retailer. This process removes the entire need for a warehouse/distribution center and can save a considerable amount of money for the retailer.

How Drop Shipping Works

In its simplest form, drop ship works like this:

  • Retailers will set up items on their website with the help of the vendor
  • The vendor provides an inventory feed for on-going availability
  • The consumer places order with the retailer
  • The retailer places an order with the vendor
  • The vendor acknowledges they’ve received the order and can fulfill the request
  • The vendor ships to the consumer
  • The vendor provides the retailer with the ASN for drop ship, this provides ongoing order/shipment information
  • The vendor also sends the retailer an invoice (810) for the completed order
  • The retailer provides the consumer with continuous order/shipment information

Benefits of Automated Dropshipping

For retailers, creating a drop ship program and seeking out drop ship-capable vendors is like multiplying your efforts and opportunities.

The power to scale.

With the hassle of manually fulfilling individual shipments out of the way, it’s easy to expand your retail or e-commerce business.

Minimal risk and cost.

Since the retailer is not responsible for warehousing inventory, your risk and costs of overstocking and storing product are reduced.

More products, more profits.

With the drop ship model, a retailer can easily add vendors to increase total product assortment without adding overhead.

Convenience and reduced labor.

All the hassle of packing of products to prepare them for shipment is taken care of for you.

Satisfy more customers.

In addition to having more products for sale, offering multiple fulfillment and delivery models helps you provide an excellent customer experience.

Potentially grow market share.

As your customers are satisfied and become repeat buyers, you could even increase your market share.

Connect the dots with drop ship-capable vendors

“Definitely the drop ship fulfillment supplier arena is the number one goal and the growth that we’ve seen in the last two years, we want to continue to build that out. SPS has been helpful in connecting the dots between SHOP.COM and capable drop shippers. We’ve seen 49 percent growth in drop ship orders in the last year.”

Eddie Alberty, Vice President of Strategic Partnerships at SHOP.COM

What EDI documents do I need to exchange with vendors to make drop ship happen?

EDI is the fuel and foundation for a healthy drop ship operation. Listed below are the most common transaction documents for drop ship.

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832 (Item/Catalog)

Used to obtain product information and load to the item master file for new items, item updates or discontinued product notification.

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850 (Purchase Order)

Used in drop ship for ordering products to be shipped from a vendor/supplier.

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855 (Purchase Order Acknowledgment)

Used by suppliers to acknowledge the receipt of the retailer’s purchase order.

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856 (ASN Shipment Confirmation)

Used as advance ship notice or shipment confirmation. This document is sent from the supplier to the retailer. Retailers will use this to get visibility into inbound shipments, receiving automation or proof of shipment for direct-to-consumer orders.

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810 (Invoice)

Used by the supplier to invoice for consumer shipments to the retailer. This may include shipping and handling.

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846 (Inventory Availability)

Most commonly used by suppliers to provide available and future inventory quantities, either globally or by ship from location.

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860 (Purchase Order Change)

Used by retailers to communicate order changes to the supplier.

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865 (Purchase Order Change Acknowledgment)

Used in retail to confirm acknowledgment of a PO change or order cancelation.

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Branded Packing Slip

Ensures the vendor shipments represent the retailer’s brand and have continuity between vendor deliveries and those fulfilled by the retailer for customer loyalty. Return policies and product returns procedures can also be included.

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180 (Return Authorization Requests and Approval - RTV)

Used to communicate between buyer and seller, a request for consumer returns to the supplier when applicable based on trading partner agreement between the two parties.

How can SPS Commerce help your supplier, vendor or distributor business reach its goals?

SPS is more than an EDI provider. Our retail supply chain technology solutions can help your business automate, scale and grow with four key components:

Fulfillment EDI

Fulfillment (EDI)

Break down the silos between business systems, including e-commerce solution, ERP and more. Streamline processes and strengthen trading partner relationships with our Fulfillment solution.

Learn More

Assortment

Assortment

Meet consumers’ growing demand to access more product information across all shopping channels. Exchange accurate and detailed product information with the SPS Assortment solution.

Learn More

Analytics

Analytics

Turn data into meaningful insights so you can win across all your channels. Uncover the insights you need to optimize inventory and trading partner performance with Analytics.

Learn More

Sourcing & Retail Network

Sourcing & Retail Network

Easily find, evaluate and onboard high-quality suppliers and brands to grow assortment. Get the right products from EDI-enabled trading partners in the industry’s leading Retail Network community and Sourcing platform.

Learn More

Community

Community

Trust your trading partner community maintenance and onboarding process to the experts. Ensure rapid compliance and faster speed to value with our proven Community development strategies.

Learn More

Help your business grow with automated dropshipping

“The e-commerce business has been great for us, we’ve seen exceptional growth over the last several years. We are expanding into a drop ship program and that has really helped grow our business as well. It’s a hybrid model so we are still partnering with brands and helping with projections and purchasing future products. But also moving forward to expand our selection, expand visibility through EDI and I hope to increase sales and revenue even further.”

Ryan Schlachter, Senior Buyer at SHOEBACCA

Additional Resources on Drop Shipping for Retailers and E-Commerce Stores

Enter a virtual library of information written to provide you with the knowledge you need to power your drop shipping program.

Drop Shipping 101 for Retailers and Suppliers

A helpful infographic that summarizes some of the information in this drop shipping 101 section.

See the Infographic

An E-Commerce Solution Infographic

See the relationship between e-commerce and drop shipping, and how a successful program can keep customers happy.

See the Infographic

Drop Shipping for Smaller Retailers

Drop ship programs aren’t just for Amazon, Target and Walmart. Small retailers and e-commerce only storefronts can benefit, too.

Read the Blog

Drop Shipping and Marketplaces Together

The advantages of combining marketplaces as a sales channel with drop shipping as a fulfillment model.

Read the Blog

Start a drop shipping program or improve existing drop ship capabilities with SPS Commerce.

Optimize drop ship order management, inventory, sales channels and fulfillment processes with help from the experts.