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Dropshipping Fulfillment: Supply Chain and Fulfillment Process Explained
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Aleksandra -
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Chief of Content Marketing
Aleksandra teaches marketing and management at various levels in High School. She writes about marketing, the economics and logistics of the dropshipping business and ecommerce in general.
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Chief of Content Marketing
10 minutes

Do you know what dropshipping order fulfillment is and how it works? Probably not, particularly if you are new to dropshipping and e-commerce.

Although dropshipping order fulfillment may sound simple, it is actually a complex process.

So, in this guide, we will try to explain how the entire process works and help you derive any useful insights or actionable information from it.

What is dropshipping order fulfillment?

First things first, dropshipping is an order fulfillment business model where an online store does not keep the products it sells in stock. You can learn how this business model works here.

But how do you get products to sell online when you do not own them? And this is where the dropshipping order fulfillment comes in.

What is dropshipping order fulfillment? Well, order fulfillment is a process that’s involved in the dropshipping business model.

It is the process of warehousing, order processing, packing, and shipping products to customers. Simply put, order fulfillment is the process that involves everything from receiving an order to placing that order into the hands of a customer.

Perhaps so many things regarding the dropshipping order fulfillment process are still unknown to you. Just be patient – we will proceed one step at a time!

👉  Learn How to Cancel a Dropshipping Order? [A Step-By-Step Guide].

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Who are the major players involved in the dropshipping supply chain?

The term “dropshipping supply chain” describes the path a product takes to go from manufacturing and eventually into the customer’s hands. And as a dropshipping store owner, you must understand who is involved in the dropshipping supply chain.

1. Manufacturers

It is a fact that manufacturers make their own products. As a rule of thumb, they do not sell their products directly to the public. Rather, they sell in bulk to wholesalers, retailers, or dropshipping suppliers.

Buying directly from manufacturers is unquestionably the least expensive way to buy products for resale. However, the majority of manufacturers have minimum order quantity requirements you must meet.

Also, you must keep products in stock and ship them to your customers. This is why it is much easier to purchase your products directly from wholesalers or dropshipping suppliers.

2. Wholesalers

Wholesalers purchase in bulk from manufacturers. Then, they usually sell their products to other businesses like retailers and dropshipping suppliers.

They do not sell directly to end consumers. And they sell products in larger quantities than an individual consumer would normally buy.

That’s to say, the main role of wholesalers is to effectively connect the right stock to retailers and dropshipping suppliers, and finally, end consumers.

Bear in mind that some wholesalers are also dropshipping suppliers themselves because they offer dropshipping services. Let’s take BrandsGateway, for example. The company operates both as a wholesaler and dropshipping supplier of branded and luxury apparel.

3. Dropshipping suppliers

Dropshipping suppliers buy from wholesalers or manufacturers and sell to dropshippers.

Then, dropshippers resell products to end consumers. (If you own an online business selling products to end consumers without holding any inventory, then you are a dropshipper.)

Dropshipping suppliers are responsible for the storing, order processing, and shipping of products. However, they do not deal directly with end consumers.

As you can see, you, as a dropshipper, are essentially a silent partner in the supply chain and have no control over it.

In a nutshell, you do not hold inventory or do the packing or shipping yourself. The dropshipping supplier/wholesaler/manufacturer does that on your behalf. But you are responsible for the efficient running of your dropshipping store, including marketing, selling, and making your customers happy.

Now that you have a better understanding of the dropshipping supply chain, let’s move on to the next topic – how the dropshipping fulfillment process works.

How does the dropshipping fulfillment process work?

Here, we will cover everything from how a customer places an order with your dropshipping store to how they receive their package. The process of dropshipping order fulfillment is as follows:

1. A customer places an order with your dropshipping store

The dropshipping fulfillment process begins when a customer places an order with your dropshipping store.

Let’s suppose that someone visits your dropshipping website and finds something that they like and need. That person decides to buy that product and places an order with your dropshipping store. They enter their shipping details.

The order is accepted and confirmed. Then, your customer receives an e-mail with their order details. Your customer’s payment is captured during the checkout process and is automatically deposited into your bank account.

2. You place the order with your supplier

The next step in the dropshipping fulfillment process is to forward the e-mail order confirmation to your supplier, specifically to their sales representative.

The sales representative has your dropshipping business credit card on file and bills it for the wholesale price of the product, including any shipping or processing fees.

One more thing that we want to mention here is that although e-mail is the most popular way to place an order with your supplier, you may also want to use automatic XML order uploading or place an order manually.

3. Your supplier picks, packs, and ships the order

When your supplier sales representative receives the e-mail order confirmation, they assign the order to their picking team.

The picking team gets a packing slip, which’s a document or a list of items that should be included in the package, to ensure that they pick the right items.

Of course, the picking team knows exactly where all the items are located in their warehouse and finds the right item. Next, the team puts the order in a shipping box.

Evidently, the shipment comes from your supplier. But as you are a dropshipper, your dropshipping business name, address, and logo appear on the package. Then, your supplier sends an invoice and a tracking number to you via e-mail.

4. You inform your customer that the order is on its way

Your customer is eager to get their hands on their order. Therefore, you do not want to keep them guessing whether the product has been shipped or not.

That’s why you inform your customer that the order is on its way, i.e., you send out a shipping notification e-mail and the order tracking details to them.

5. Your customer receives the order

It is important to send out a delivery notification e-mail to your customer. This can help you verify the item has been delivered to its intended location.

Sure, if there is any kind of problem like an incorrect, damaged, or missing item, you will know right away and resolve it.

Also, do not forget to send a “Thank you for your purchase” e-mail to your customer to build a long-term relationship with them.

This is the last step in the dropshipping order fulfillment process, provided that your customer is happy with their order.

How to improve the dropshipping order fulfillment process of your e-commerce business

Today, customers are better informed and more demanding than ever before. In reality, customers do not get to see the dropshipping order fulfillment process.

But just because they do not get to see it, doesn’t mean it is not an important part of your dropshipping business.

Clearly, a fast and effective dropshipping order fulfillment process is the deciding factor in the success of your dropshipping business. It can help you achieve a competitive advantage since it directly impacts how well your products do in the market.

Thus, you need to ensure that suppliers send the right products to your customers promptly. In other words, you need to ensure that your supplier ships the right item, to the right customer, in the most efficient way.

NOTE: How to Reduce AliExpress Shipping Times in 2021

Although you, as a dropshipper, do not have control over the dropshipping order fulfillment process, there are some important factors to keep in mind in order to improve it:

1. Manufacturers/wholesalers/dropshipping suppliers

Though you have no control over this process, working with the right supplier goes a long way towards meeting your customers’ expectations.

As you already know, manufacturers, wholesalers, and dropshipping suppliers play a crucial role in the dropshipping supply chain. So, working with the right supplier allows you to streamline the dropshipping order fulfillment process more effectively.

Whether you choose to source your products from a dropshipping supplier, wholesaler, or even manufacturer, make sure that they are able to provide high-quality products to your customers in a timely manner.

2. Location

The location of your customers is another thing you need to consider to improve the effectiveness of your dropshipping order fulfillment process.

Aside from the location of your customers, the location of your suppliers is another significant factor in meeting your customers’ expectations around delivery speeds and costs.

Nowadays, both fast and affordable shipping options are important to customers. So, optimizing your fulfillment process, depending on where your customers and suppliers are located, can help you reach more customers in the most cost-efficient manner.

For example, if you have a large international customer base and your customers are spread across multiple countries, then it is advisable to work with a supplier with multiple warehouse locations around the globe.

But if you only have local customers who are centrally located in one region, you may want to opt for a domestic supplier.

BONUS: Find the top 10 e-commerce fulfillment companies for your store.

3. Automation

Want to save time and money while selling more? Then, dropshipping order fulfillment automation is a must for you. This enables you to eliminate manual and repetitive tasks from your order fulfillment process and focus on other important things.

Thanks to effective integration from your order entry system to order fulfillment, you can have orders sent automatically to your suppliers. Sure, this can save you time and money as well as reduce human error.

As we have already said, one of the most common ways suppliers accepts orders is via e-mail. And, fortunately, the majority of the e-commerce platforms let you automatically send e-mail orders to your suppliers once a customer has placed an order with you.

This way, you only need to click one button and the order will be sent to your supplier automatically. You do not have to manually type out all the details for the supplier.

4. Returns

The dropshipping order fulfillment process does not end when your customer receives their order. It actually ends when they are happy with their order.

As the old saying goes, “A dissatisfied customer tells more people about their negative experience than a satisfied customer does.” So, if your customer is unhappy with their order, you should offer them a refund or replacement.

To do so, you must have a clear “Return & Refund Policy” in place and work with a supplier that offers flexible return options.

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Dropshipping Fulfillment – Complete Guide

E-commerce has quickly developed in the past few years, requiring dropshipping businesses to improve their dropshipping order fulfillment process. Plus, customers are becoming more and more demanding.

Therefore, an effective order fulfillment process is an essential part of any successful dropshipping business. And after a customer clicks the “buy” button, you need to make the experience as seamless as possible.

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About the Author

Profile picture of Aleksandra
Aleksandra Miteva
Aleksandra teaches marketing and management at various levels in High School. She writes about marketing, the economics and logistics of the dropshipping business and ecommerce in general.