Dropshipping Fulfillment: The Essential Guide

Ready to expand your wholesale or retail business with dropshipping but don’t want to build a website, Amazon store, or Shopfiy site?

For growing ecommerce businesses, dropshipping is a viable method that many use to manage orders and satisfy their customers. With low entry costs and plenty of flexibility, it is definitely a key business model to consider when starting out.

These businesses work with the likes of manufacturers, wholesalers, and retailers in order to sell their products. However, many of these parties are unable to fulfill the entire order process for their clients, so need to outsource to a dropshipping fulfillment company.

Those looking to hand these responsibilities over to a partner should look no further than dropshipping fulfillment. In this essential guide, we cover all you need to know about this service, including definitions, comparisons, strategies, and how to choose the right partner for your business.

What is dropshipping? 

Before diving into fulfillment, it is first important to define exactly what dropshipping is. In the current age of ecommerce, dropshipping is quite a loosely used term that encompasses a number of different meanings.

Dropshipping is a business model adopted by small or start-up businesses. A dropshipping business will never own their own product, instead buying product from a manufacturer, wholesaler, or retailer whenever a customer purchases one from an online channel.

This is beneficial for small businesses as it means they do not have to invest capital into stock. Also, they do not ever need to see or store the product, meaning they save money on overhead costs.

What are the different types of dropshipping?

There are four different dropshipping models that ecommerce businesses adopt:

1 – Product reselling – finding products from suppliers and advertising them for sale on an independent website

2 – Business extensions – becoming an extension of a supplier who does not currently advertise to the consumer and doing it for them

3 – Product creation – bundling products together for resale

4 – Print on demand – selling products that have an image or text printed on them

While these four models are slightly different, they all have one thing in common: the ecommerce business does not own the product they advertise. Instead, whenever a customer makes a purchase, they will send this to the supplier to deal with.

This can become an issue for suppliers who cannot logistically handle the needs of the ecommerce business and their customers. This is where outsourcing to a third party for dropshipping fulfillment comes in.

What is dropshipping fulfillment?

Dropshipping fulfillment is a supply chain model where an ecommerce business does not own its stock. Instead, they act as an intermediary, serving as a middleman between the supplier and the customer.

Where this differs from standard dropshipping, however, is the party that handles fulfillment. In the standard dropshipping model, the supplier would handle the supply chain of their client – the ecommerce business. With dropshipping fulfillment, the supplier outsources this fulfillment to a third party provider, such as 3PL Center, to help manage it.

This is more useful for all parties as it frees up the time and responsibilities of both the ecommerce business and the supplier. The fulfillment partner understands the best ways to manage the supply chain, so will handle the product from when they onboard it until the moment they ship it.

Who are the main parties involved in dropshipping fulfillment?

In the dropshipping fulfillment model, there are three main parties:

1 – The ecommerce business – they buy product from the retailer whenever a customer places an order

2 – The supplier – the supplier could be one of many entities, including manufacturers, wholesalers, and retailers. They store their products at a third party warehouse awaiting orders.

3 – The fulfillment partner – the fulfillment partner stores the supplier’s product in their warehouse awaiting orders. When a customer makes an order through the ecommerce business, the fulfillment partner prepares it for shipment and sends it to them.

Fundamentally, the supplier is the dropshipper as they advertise dropshipping services. While they sell the product, their fulfillment partner handles the actual picking, packing, and shipping of the product, making them part of the dropshipping fulfillment process.

What does the dropshipping fulfillment model look like?

While it may seem a bit complicated due to the number of parties involved, dropshipping fulfillment is actually quite simple:

1 – A customer places an order with an ecommerce business.

2 – The ecommerce business buys the product from a supplier.

3 – The supplier’s fulfillment partner, who houses their stock, receives the order and begins processing.

4 – The fulfillment partner sends the order to the customer.

5 – The ecommerce business sends the tracking information to the customer so they know when to expect their order.

In reality, whenever a customer places an order, it is only the fulfillment partner that has to act. The ecommerce business will obviously pay for the product, and the supplier will pay for the fulfillment, but the weight of responsibility rests on the fulfillment provider.

Dropshipping fulfillment vs 3PL fulfillment

The dropshipping fulfillment model shares similarities with 3PL fulfillment. However, there are a couple of major differences.

Importantly, in this scenario, the business using 3PL fulfillment actually owns the product. Unlike dropshipping where the business buys the product straight from a retailer or wholesaler, they instead send their own product to the 3PL center for fulfillment.

Secondly, 3PL fulfillment typically involves only two parties – the ecommerce business and the 3PL. The business will send their product to the 3PL for them to store and ship when orders come through.

Businesses that buy from suppliers who outsource their fulfillment may end up removing the supplier altogether if their business outgrows them. This is when they would switch from dropshipping to 3PL fulfillment. However, this does mean that the business would need to buy their own stock and house it with the 3PL provider. This is a big step, especially for smaller companies that may need the capital to grow.

What are the benefits of dropshipping fulfillment?

Dropshipping fulfillment is a business model that benefits both ecommerce businesses and retailers. As both parties give responsibility of the supply chain to a fulfillment partner, it frees up their time as they do not have to deal with orders.

Moreover, it also helps them with:

Stock management – not managing your own inventory means that you no longer need to pay for additional space or workers. This applies to both ecommerce businesses and retailers.

Customer service – handing over responsibility of the product means that fulfillment partners will manage all that comes with it, including returns and customer service.

Scalability and expansion – by no longer having to focus on fulfillment, you can focus on other areas of your business to expand, such as branding and marketing.

Cost saving – consulting a dropshipping fulfillment provider will save you money in the long run due to their discounted shipping rates.

Dropshipping gives smaller businesses the opportunity to start building their business due to low entry costs and minimal inventory management. Suppliers that work with dropshipping businesses will find great value in outsourcing fulfillment to a third party, as it gives them more opportunity to work with and sell to more clients.

What else can a fulfillment partner provide?

Working with a dropshipping fulfillment partner means that you can access their vast insight of the industry. Fulfillment companies like 3PL Center work with a variety of businesses and industries, meaning they understand how to solve common issues before they become detrimental.

With optimization and efficiency at the forefront of any fulfillment company, you rarely have to worry about customer satisfaction rates. People enjoy a fast and reliable service, and companies like 3PL Center provide just that.

By allowing a fulfillment company to manage your order process, this gives you more time to focus on other clients and grow your business. 

Partnering with a 3PL gives you access to their network of online partners and channels, potentially opening doors you previously had no access to. As companies like 3PL Center work with many different industries, we understand what works best for your supply line.

How does 3PL Center optimize dropshipping fulfillment?

Many fulfillment providers will use similar services to ensure that they meet the needs of clients and their respective orders. At 3PL Center, we take a forward approach to fulfillment, ensuring that every step is methodical and efficient.

Systematic onboarding

We prioritize speedy onboarding to ensure all of our client’s items are quickly put into inventory awaiting orders. We have a 48 hour guarantee that your product will be put into storage, making customer orders eligible. 

Optimized warehousing

3PL Center’s warehouse layout is ahead of the industry curve. We invest nearly three times the amount as our competitors to ensure that warehouses can perform the highest quality dropshipping fulfillment. We utilize space to the fullest with carefully placed VNAs and turret pickers.

Strategic picking and packing

We layout our picking and packing strategy so that the product with the highest demand is always closest to the packing stations. Our software’s algorithmic planning sets out optimal routes around the warehouse to ensure the time our workers spend picking is minimal. On top of this, we use scanners that update the inventory database in real time, ensuring you know exactly what the status of your product is and how much of it you have available.

Reliable shipping

We work with a number of delivery companies to ensure that customers are always happy with shipping. With 99% shipping accuracy for orders and quantities, we always strive to exceed customer expectations. If something does go wrong, our expert team will fix the issue and ensure all parties are happy.

Dropshipping fulfillment costs and prices

When looking to outsource your dropshipping fulfillment, you need to consider the costs that come with it. Many businesses think that the bulk of the cost comes from the shipping itself. However, you will need to consider several other services that will incur fees:

Onboarding – Receiving and stowing your product into inventory

Storage – Holding your product while awaiting order

Pick and packing – Readying your product for order

Packing materials – The materials used to ship your product. While some materials are free, special products that require tailored packing will likely incur costs.

Kitting – Assembling special products in a certain way

Shipping – Sending orders to your customers

While this is a lot of factors to consider, it is important to remember that fulfillment partners typically receive reduced shipping and packaging costs from the channels they work with. This means that moving a lot of items in bulk will receive further discounts, saving your business a lot of money down the line.

Choosing a dropshipping fulfillment partner

When choosing a fulfillment partner to manage your client’s dropshipping model, you need to make sure that they are the right fit for your business. Make sure that they cover these important bases:

Strong relationships

You need a fulfillment partner that has access to a number of online platforms and retailers. While you may have partnerships already if you are a supplier, fulfillment companies like 3PL Center pride themselves on the strong links they have with online marketplaces and other sellers. If you do not have access to the likes of Amazon, Shopify, or any other major retailer, find yourself a partner who does.

Fast shipping

With Amazon Prime changing customer expectations on delivery times across the world, 2-day and express shipping has become the new industry standard. If your dropshipping fulfillment partner cannot offer fast shipping, this will likely impact customer satisfaction and sales. Speed and reliability is vital for any fulfillment center.

Warehousing network

If your clients have needs that span across the entire country, you need a fulfillment partner that has a vast network of warehouses to meet these needs. This directly impacts the speed in which a customer receives their order. Without proper coordination of warehouses, orders can become unreliable and complicated to fulfill.

Integration and automation

An integral part of simplifying the fulfillment process is using integrated warehouse management software with all relevant online platforms. While many partners say this is a simple process, this needs careful consideration to ensure it works to the ability you need it to. Working with a dropshipping fulfillment partner like 3PL Center ensures that their technology integrates with all the top retail platforms.

Cost effectiveness

The fulfillment process includes many costs and companies will charge you differently depending on their rates. It is important that outsourcing dropshipping fulfillment saves your company money long-term. Ensure that you find a partner that offers good discounted rates and is transparent with costs from the get-go.

Why choose 3PL Center as your dropshipping fulfillment partner?

Fundamentally, dropshipping fulfillment is about delivering a fast and reliable service. Customers want their orders to be on time and in good quality. If so, they may become a repeat buyer and generate a loyal relationship to your business.

At 3PL Center, we understand the importance of building trust with your clients. With 99% shipping accuracy and shipment same day, we can guarantee a seamless and excellent service. If things do go wrong, our expert team is on hand to resolve any issues and provide excellent customer service.

We also have our client’s best interests at the forefront of our work. By allowing us to efficiently manage your dropshipping fulfillment needs, you free yourself from burden and start focusing on your business growth.
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