Drop shipping, according to Wikipedia, is a supply chain management approach in which the seller does not store the goods in stock, but instead moves customer orders and shipment information to a wholesaler, manufacturer or to a 3PL (third party logistics) service provider. The wholesaler, manufacturer or 3PL service provider will then ship the items directly to the customer.
Usually drop shipping is an extra service offered by some wholesalers. When your wholesaler offers drop shipping you will not have to worry about storing and shipping your goods. When your wholesaler does not offer drop shipping, this is where a 3PL provider gets in. When a customer places an order, you inform your wholesaler or 3PL provider and they will be the one who will ship to your customer on your behalf. This means you can sell several products without having to worry about stock inventory. This is what makes drop shipping advantageous for home-based businesses.
It doesn’t matter how you sell your products online (Amazon, eBay, shopify or even having your own online shop) because if you’re starting a home-based business, you don’t want to stock any inventory if you can help it. The Majority of the people who are starting their online business through an online store or auction sites don’t have enough money to buy a lot of products or a warehouse to store their products. Working with a drop-shipper will save them a bunch of money and time.
A drop-shipper is simply a Certified Wholesaler or 3PL provider who offers this service to customers. Remember that not all wholesalers offer this kind of service. The truth is, it’s not easy to find certified wholesalers who offer drop shipping.
Working with a drop-shipper or 3PL provider is very easy for online sellers. When a customer places an order, you then inform and give all the necessary details (product code, product description, quantity, etc.) to your Drop-shipper/3PL provider. They will then process the order and ship it on your behalf.
Today’s 3PL service providers have a full integration so it is easy to find the status of shipments. You will have full access and details of the processing of orders and will have live information of your inventory. For example, National Products Fulfillment offers direct integration of your shopping cart (National Products Fulfillment integrates with leading 3rd party shopping carts, accounting packages and payment gateways), integrates easily with their API, data transfer via files or spreadsheet and online data entry of your inventory to their system.
If you are looking to sell products on-line, then your best bet is to find a reputable drop-shipper or 3PL provider. It will make your life and your customer’s life much simpler.