Comparison Of Order Fulfillment Houses and Drop Shippers
Order fulfillment - As your business grows, you are likely to find that fulfilling orders in-house distracts you from other critical tasks central to the growth of your business. Or you might find that it involves more than your current staff can handle. Using a fulfillment house or drop shipper may be something to consider. And decision to hire an order fulfillment house or a drop shipper to fill your online orders will depend on your business's current needs and capabilities. And you choice may change as your business grows.
Before making a decision, you will need to understand the key differences between order fulfillment houses and drop shippers, and how they operate, in order to determine which will most effectively meet your needs. You'll need to research and evaluate your options to find a vendor with whom you can work. Then you and the vendor will need to write a contract that clearly outlines your expectations. Finally, you'll need to integrate your operations to ensure that orders are so seamlessly executed that customers won't know the difference.
Fulfillment Houses and Drop Shippers Compared
An order fulfillment house stores your merchandise for you and is in charge of getting orders to your customer's door. With fulfillment houses, you own the merchandise; the fulfillment company stores it, picks it off the shelves, and ships it for you. The business is yours, but the fulfillment house provides packing and shipping services.
A drop shipper is basically a wholesaler who owns the goods and ships them directly to your customers, and generally services several retailers. You own the customer database, but the drop shipper owns the product. You buy product from the drop shipper and the drop shipper packs and ships the product to your customer.
Small Businesses and Drop Shippers
Drop shipping allows you, a home business or web site owner, to offer hundreds of products without any significant capital expenditure other that time and some startup costs. Because the drop shipper owns the product, all you have to do is advertise the product, get paid by your buyer and then, after taking your profit and paying the drop shipper, have the drop shipper send the product to your customer. You don't have any problems with storage or unsold inventory. The risk is all on the drop shipper.
Small Businesses and Fulfillment Houses
If you want to own your own inventory, use a fulfillment house. Buy your inventory, store it in the fulfillment house and have the fulfillment house ship to your customers. With the advent of the internet, the order fulfillment warehouse business has become very competitive. For example, you can often store a full pallet of goods in a fulfillment house for as little as $10 per month. So you can have your "own warehouse" as soon as you are ready to invest in some inventory.
Solutions
You will either buy directly from the factory in large quantities, you will buy in smaller quantities and ship through a warehouse or you will use a drop shipping service.
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