Imagine a business model where all you have to do is create an eCommerce brand and focus on selling stuff while a third party handles the inventory, shipping, and fulfillment.
You don’t pay for the product until the customer places an order for it.
Dropshipping is an online business model with probably the least barriers to entry which attracts Inovices and professionals alike to select a niche, create a brand, market, and make money.
What is Dropshipping?
Dropshipping is an e-commerce retail model that allows stores to sell products without keeping any physical inventory. The products are shipped directly to the consumer. This way, the seller doesn’t have to handle the product directly.
There is a partnership between an online retailer and a supplier. The retailer passes the orders to the supplier, which will package and ship the items directly to the end customer, but in the retailer’s name.
Dropshipping Business Model
Dropshipping works in Just FOUR Steps:
- Step One: Your Customer places an Order from your Store.
- Step Two: Your Store automatically sends the Order to your dropshipping supplier.
- Step Three: Your dropshipping supplier prepares your customer’s order.
- Step Four: Your dropshipping supplier ships the order directly to your customer.
Benefits of dropshipping business model
The biggest advantage of Dropshipping is that there is no more upfront Inventory Cost or Shipping Logistics. With Dropshipping, products are sent directly from your wholesaler to your customer.
Other advantages that come with dropshipping:
- Smaller investment
- Easy to start
- A wide selection of products
- Easy to scale
We have introduced the “Dropship Process” for the Sales & Purchase workflow. This is an automated process that streamlines the Shipping/Fulfillment of a Sales Order directly from the Purchase Order. The SO can be linked to a Dropship PO, and it can be shipped directly from the linked Dropship PO.
Let’s understand the working of the dropship model in detail.
1. Added “Is Dropship?” checkbox in the Item module (also in the Item Centre) under the other attributes tab.
- Added Dropship Vendors option in the Item module under other attributes tab.
- When the “Is dropship” option is true then the default Vendor option is required.
- In the dropship Vendors option, users can select multiple Vendors.
- If the user does not select dropship Vendors then the default Vendor will automatically be added in the dropship Vendors option (On saving the Item).
2. Added 2 new App config’s under the General tab:
- Dropship PO notification for Vendor: Dropship PO notification emails will be sent to the Vendors
- Dropship PO notification – Additional emails: Send dropship PO notifications to internal users when the Dropship PO is created, here you can add comma separated emails like email@example.com,firstname.lastname@example.org
3. Added the “Create Dropship PO” option in the Sales Order module.
So, it goes like this:
How does it work?
- Create an SO with the dropship Items.
- There are 4 columns in the SO module (Line level) i.e Dropship Qty, Is Dropship Item?, Dropship PO Number, Dropshipped Qty.
- In Dropship Qty: User can see linked qty with the Dropship PO, User can change dropship qty and the same change will be updated in the Dropship PO.
- When the create dropship button is clicked, a window will open.
- In the create Dropship PO form, only those Vendors will be shown who are added in the dropship Vendors of the item.
- Users can only create Dropship PO of (Qty – QtyAllocated – QtyShipped).
- The dropship qty can be changed if required.
- The Vendors can be changed from the list if required.
- Select the Items, and hit “Create PO”.
- This will create Dropship PO for the dropship Items.
- Open the linked dropship PO.
- Hit the Dropship option.
- The Dropship PO has only options to Add to Email Queue, to Void.
- Enter the required details like Receipt Date, Packing Slip, and now the Order can be dropshipped.
- The Dropship Qty can be changed here if required.
- The Dropship option is also available in the PO Centre, both on the right-click and in the options dropdown.
- Dropshipping will create an Invoice for the linked Item in the SO.
- The Item Receipt and the Bill for the dropship PO will be automatically generated.
- The status of the linked dropship SO will change to Shipped/Partially Shipped.
- The Dropship PO Number and Dropshipped Qty will appear on the line level of the SO.
- The linked dropship PO can be viewed in the Linked Orders tab of the SO.
- You can enable sending the dropship PO notification emails directly to the vendors and/or internal users when the dropship PO is created or updated. This setting can be turned on from the app config as mentioned above.
- The email body for this notification can be customized from the “Email Templates Configuration” module
- When dropship PO notification for Vendor is turned on, any change in qty of the SO will send a notification email to Vendor.
Users can process the dropship PO directly using the CSV file upload.
- If there are no dropship items available in the SO, and the “Create Dropship” option is selected, the system will show an info error that”‘No dropship item(s) available”.
- Users can link only 1 dropship PO with an SO line.
- If the Dropship Qty is changed on the SO, it will automatically be updated on the linked Dropship PO.
- If the dropship PO has been received then the user will not be able to change dropship qty on PO, but have to edit the Item receipt or Invoice.
- In the PO module, we added the dropship SO number column.
- In the PO module, we added an ability to dropship PO based on the qty entered by the user.
- From the purchase order Centre, only the full qty of dropship PO can be shipped.
- In the sales order Centre, we added the following columns:
- Is dropship (Header level): It will only be true if there is any dropship PO linked with SO.
- Dropship PO#,
- Dropship Qty (Line level).
- In the purchase order Centre we added the following columns:
- Is Dropship (Header level),
- Dropship SO#, Dropship Qty(Line level).
- Linked Dropship PO will be canceled if the Items are removed from the SO.
- In order to void a dropship SO, the User has to first delete the Dropship PO linking.
- Merge Line: The dropship SO line cannot be merged with Other lines.
- Editing/voiding the Invoice created from a Dropship SO will trigger the same change in linked drop-shipped IR/Bill.
- The user cannot update qty directly in IR/ Bill.
- If the user void an Invoice then the linked dropship Bill/ IR will also be deleted.