Many UK retailers now sell products on their websites that they never hold in their own warehouses. Instead, when a customer orders, the brand that supplies the product dispatches it straight to that customer. These arrangements are known as dropship, direct to consumer or supplier direct fulfilment programmes. For a brand, they open up a retailer's audience without the retailer buying stock up front. For the retailer, they extend the range without the cost of holding it.
How it works
Your products are listed on the retailer's website at the retailer's selling price. When a customer orders, the retailer takes payment and passes the order to you, usually through a supplier portal, an EDI connection or an API. You pick, pack and dispatch the order to the customer, often using the retailer's nominated carrier and following its packing and paperwork rules. You then confirm dispatch with tracking, and invoice the retailer at the agreed cost price.
Stock feeds
A retailer can only sell what you have, so most programmes require a regular stock feed, usually at least daily, sent as a file upload, over SFTP or through an API. If the feed is out of date, the retailer sells stock you do not have, and the order has to be cancelled. Retailers track cancellations closely, so accurate stock is the foundation of a good dropship account.
Service levels
Retailers set rules for how quickly orders must be dispatched and measure suppliers against them, along with cancellation rates and delivery performance. Missing them repeatedly can lead to charges or to products being taken off sale, so it is worth understanding the retailer's service levels in detail before you start.
Returns
Returns are handled differently from one programme to the next. Some retailers take returns back themselves, while others ask customers to send items back to the supplier. Agree how returns, refunds and faulty items will work before the first order goes out.
What brands need in place
To run dropship well you need accurate, up-to-date stock, a reliable way to receive orders and send dispatch confirmations and stock feeds, access to the retailer's nominated carrier where one is required, and the ability to dispatch every working day to the retailer's deadlines. You also need to pack to the retailer's specification, which may differ from how you pack your own website orders.
Running dropship through a 3PL
A 3PL can take on the day-to-day work: holding your stock, processing retailer orders, dispatching them with the right carrier and packaging, and keeping stock levels accurate across every channel. Because retailer orders are fulfilled from the same stock as your own website and wholesale orders, you avoid splitting inventory between channels.
TDW Logistics fulfils dropship orders for UK retailers on behalf of brands, alongside their own online and wholesale orders. Get in touch to discuss a retailer programme you are joining or already running.