All about Dropshipping and Fulfillment; differences, advantages and disadvantages

Do you have an electronic business and have heard about dropshipping and fulfillment but don't know exactly what it is? In this article we will explain everything about these two logistics models.

Dropshipping and fulfillment have great advantages in the world of ecommerce and you need to fully understand your business to know which model is best for you.

All about Fulfillment

For ecommerce, Fulfillment is a process whose purpose is to expedite the delivery and fulfillment of online orders in a precise manner; the process can occur internally or outsourced.

3PL Fulfillment or fulfillment by third parties is when a company decides to outsource its fulfillment options to another company often called the 'Fulfillment Center'; allowing said company to handle the merchandise of your store, pick up the orders, pack them and take care of all the shipping logistics.

The fulfillment steps are as follows:

• Reception of ecommerce products.

• Register the products and enter them into the system.

• Store the products inside the warehouse.

• Automatically receive orders from the electronic business when it generates a sale.

• Locate and prepare orders (picking and packing).

• Deliver orders to the courier.

• Follow up on orders and provide tracking to the end customer.

• If required, manage changes and returns.

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Some advantages of fulfillment is that it gives you more time to focus on the strategic decisions of your business since you do not carry out preparation and delivery work. In addition, operating costs decrease and there is a greater probability of winning the loyalty and repurchase of your customers.

Among the disadvantages is that you usually have to adjust the delivery options to those offered by the fulfillment center and you have no control over the mobilization of deliveries.

What is dropshipping?

On the other hand, dropshipping is a modality in which the ecommerce business does not have a stock of the products it sells. In this case, the ecommerce buys the product from a seller who stores it and makes the delivery.

The manufacturer charges a higher wholesale order for each item you purchased individually.

This model is more common within electronic businesses that are just being born and do not have their own brands or a large budget to invest in their own inventory, storage and logistics.

The dropshipping steps are as follows:

• The buyer enters the electronic business, chooses and buys his products.

• The e-commerce sends the purchase and customer data to the product provider.

• The supplier carries out the picking and packing and the shipment to the customer.

Some of the advantages is the possibility of offering your customers a broader portfolio of products. You do not need to invest in products, storage or transport. In addition, in most cases the provider has the capacity to respond to high demands and meet delivery times.

However, if the supplier does not provide a good service, your ecommerce will be affected and the profit margin is lower for the electronic business under the dropshipping model.

Dropshipping and fulfillment are two different models and the choice of one or the other is related to the type of business you have, its growth levels and the objectives you have.

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