In the world of e-commerce, there are two terms that are often used, and people even get confused about them. Dropshipping and fulfillment are two terms that are often used interchangeably, but these two things are very different. When it comes to running your own e-commerce platform, it is very important to know the differences between dropshipping vs fulfillment. Both of these e-commerce store have their own benefits but they both have different operations.
In this article, we have discussed all the differences between dropshipping and order fulfillment so that you can choose the right option for yourself. So, let’s jump right into the article.
What is Dropshipping?
Dropshipping has been around for a very long time. It is a way for people to easily sell different products without having to find any kind of storage or management of inventory. Dropshipping companies basically sell products on their own websites but don’t have stock, which means they don’t have to keep any kind of inventory or need a warehouse.
A dropshipping business will actually partner with another supplier who can import the specific products and directly send them to the customers. This type of supplier is basically a wholesaler or even a manufacturer. The best thing about dropshipping is that you don’t even have to purchase the item in advance. All you need to do is post the product on your website, and when the customer buys the product, the dropshipping supplier will fulfill the order by using the products from their own inventory.
What is Fulfillment?
Fulfillment is a process through which an order is received, processed, and then shipped to the customer. This is one of the main parts of supply chain management. The process begins when a customer places their order. The fulfillment center picks the items for the customer and ships them securely. There are different parts to order fulfillment. Below, we have mentioned some of them.
Receiving Order
The first step in order fulfillment is receiving the order. When a customer places an order, it is entered into the system. The system stores all the information, such as the shipping information, type of products, quantity, and other information regarding the customer, which is important to process the order.
Inventory Management
Fulfillment also relies on accurate inventory. This means that all the items should be in stock. In inventory management, it is very important to make sure that if an item is out of stock, you get it ordered, or if the item is overstocked, you tackle it the right way.
Picking
This step involves retrieving the products mentioned in the order. This can be done manually with the help of employees or through automated systems. It is very important that the right products are collected to ensure that the customers get what they want.
Packaging
Packaging is also an important part of this process. The fulfillment center ensures that the entire order is packed securely so that it does not get damaged during shipment. The invoice and documents are also packaged for safety.
Shipping
Shipping is also done through these centers. It is low-cost and fast to ensure that the customers are satisfied with the service they are getting.
Returns
Fulfillment also helps with return and exchange. They make the entire process super simple and easy for the customers, which also improves customer satisfaction.
Dropshipping vs Order Fulfillment- Key Differences
Dropshipping vs. order fulfillment has a lot of major differences. Some of them are mentioned below so that you can understand which is the right option for you.
Feature Fulfillment Dropshipping
Inventory Management: Seller will keep the inventory and manage them as needed. No inventory is needed, the supplier handles the stocks.
Control Over Shipping: Full control over the shipping process. Limited control over the shipping process.
Upfront Cost: The upfront costs is slightly higher. You have to pay less upfront costs.
Products Range: You have full access to the products and even the customization. Limited products access.
Shipping Costs: It depends on the warehouse location but is mostly predictable. The shipping costs can be higher because it depends on the supplier.
Branding and Customization: Full control over the packaging and even get the products customized. Limited control on the custom packaging and branding.
Order Processing Time: Everything get quickly done because the process is much more efficient. The process can take time because third-party is involved.
Profit Margin :The profit margin is less as you have to give it to the supplier as well. Profit margins are higher because inventory is being managed.
Scalability: Can be challenging to grow as you need to manage the inventory. Easier to sale because you don’t have to worry about the stocks.
Customer Support: You have less control over the customer support, however it also depends on the supplier. Direct control over the customer support services.
Which One Should I Choose: Dropshipping or Fulfillment?
Dropshipping vs. fulfillment: If you are wondering which one to choose, then the following are some points that you must consider.
Your Budget
A business needs to consider its budget. If you have a limited budget and don’t have a lot of money to invest, dropshipping is a good option. Here, you can save money on warehouse space and cut the initial cost.
If you have the financial resources, then investing in fulfillment can be great for your company as it will allow you to have better control over the quality of the products and other services you offer customers.
Control
For businesses that don’t want the hassle of managing inventory, they should opt for drop shipping. Here, you won’t have to manage any kind of inventory, but it is important to know that you won’t have any control over the packaging of the products or even the shipping. Order fulfillment will allow you to have better control over the quality of the products and other important aspects of the order fulfillment.
Scalability
When it comes to scalability, dropshipping will not be an issue. If your sales are growing, you can simply increase the orders without worrying about the logistics of fulfillment. Order fulfillment can also offer scalability, but you need to take care of the infrastructure and find larger warehouses.
FRQs
Is dropshipping vs. fulfillment different?
Yes, there are many differences between the two, and this is why it is important to choose the right one for your business type.
Which is better for scalability?
Dropshipping is considered much better for scalability because the business does not have to worry about warehousing.
Which model is cost-effective?
Dropshipping is ideal for people who are looking for cost-effective model since you have to pay less upfront cost.
Which offer better control on customer service?
If you want more control on the customer service then opt for fulfillment as they make sure your customers are content and getting best services.
Try NextSmartShip’s Order Fulfillment Today
If you are looking for a good fulfillment process, NextSmartShip is the best place for you. They offer amazing services to their clients and tackle all the logistics so that they can focus on other aspects of the business and grow it. The best thing about them is that they offer the most cost-effective methods. They are also quite quick and accurate and ensure that the customers are getting the best services.
NextSmartShip also offers real-time inventory tracking, fast and accurate shipping, and a global reach to ship orders worldwide. Therefore, they are the perfect solution for businesses looking for a reliable fulfillment center.
Conclusion
Dropshipping vs fulfillment are two common practices in the e-commerce world. It is very important for businesses to know the difference between the two so that they can choose the right one for themselves. Dropshipping and order fulfillment both have benefits and disadvantages. Hence, we hope this article was beneficial for you. Now, you know the major differences between the two and can choose the right one for your company. Also, make sure to check out NextSmartShip for their amazing services.
