We often hear and see people interchangeably use “drop shipping” and “order fulfillment” in eCommerce. Drop shipping and order fulfillment, despite their similarities, differ from each other in many ways. It can be tricky to understand the difference, especially if you are new in the eCommerce field. No worries! We’ve got your back. Here we have an in-depth look at drop shipping vs. order fulfillment in this article.
Dropshipping Vs. Order Fulfillment Statistics in eCommerce
A report delivered by Statista forecasted that the global dropship market approached $196.78 billion in 2022, and it will continue to grow, reaching $476.1 billion by 2026.
Drop shippers and order fulfillment companies fulfilled roughly $85 billion in sales. The growth in dropship and order fulfillment businesses can be primarily tied to the increased demand for faster delivery and next-day shopping of online shoppers. However, the need for quick delivery is so dire that 38% of online shoppers say they will cancel a purchase whose shipping takes longer than a week.
eCommerce has snowballed in the last few years and is expected to continue to grow. According to a report by Statista, the eCommerce market is expected to reach $4.5 trillion by 2021.
As the number of online shoppers increased, retailers find it unprecedentedly important to emphasize eCommerce website development services to provide a seamless experience for their customers, making sure all items ordered through an eCommerce store are fulfilled promptly. Yet, not every drop shipper can handle the order fulfillment properly.
What is Dropshipping?
Drop shipping is a business model where the retailers do not keep goods in stock. Instead, they transfer customer orders and shipment details to the wholesalers, who ship the goods to the customers on their behalf. The retailers do not buy the products from the wholesalers, nor do they have physical possession of the product during transit.
Therefore, drop shipping allows you to sell products without having them physically in your possession at any point.
The most famous example of drop shipping is Amazon FBA (Fulfilled by Amazon). The great thing about Amazon FBA is that it doesn’t cost much to get started, and you don’t need any experience with eCommerce or shipping!
Meet Irwin Dominguez from San Diego! Having no clue how to do drop shipping business, he was once a novice in this sector. But after learning some basic eCommerce ideas in Google, he opened his own e-shop account and started his business with skills acquired as a local marketing consultant. He started small but made it big. On his best day of e-commerce, Irwin earned a cool $30,000 a day! Even averagely speaking, he pulled in $10,000 per day, and these numbers kept increasing. Within 8 months, he drew $1,000,000 as profit as a drop shipper. So, even if you know little about drop shipping or eCommerce like Irwin, you can always equip yourself with the necessary knowledge to start your first business. Running a business is not rocket science, it is something everyone can learn and master.
What is Order Fulfilment?
Order fulfillment in eCommerce is receiving and processing customer orders, including delivering products and services to the customers. The main aim of this process is to ensure that your customers receive their orders as quickly as possible.
Businesses often practice automated order fulfillment or manual order fulfillment. As the names imply, manual completion is done with human effort, and automated one is done by machinery. Order fulfillment in eCommerce involves two main processes:
1. Order Management: This process includes receiving, checking, and fulfilling orders. Fulfillment can include processing payment and shipping information, printing shipping labels, packing and shipping products, tracking shipments, and providing customer service.
2. Customer Service: This process involves communicating with customers to answer questions about their order status or resolve issues.
Drop shipping vs. Order fulfillment: How Do They Differ?
Although different eCommerce circles use the terms “drop shipping” and “order fulfillment” interchangeably, the terms differ. And for simplicity’s sake, we will discuss how much they differ.
Drop shipping is an eCommerce business model where the seller doesn’t keep any inventory. Instead, they fulfill orders by shipping products directly from the supplier. Order fulfillment is more like an extension of eCommerce than drop shipping because it involves customer service and shipping. Like drop shipping, it does not require you to own any inventory, but you have more control over your customer experience through fulfillment services.
Order fulfillment is the process of getting an order to your customer. When you run your store, you need to stock products to sell and then ship them out when someone buys one. This is called “inventory management,” It can be very time-consuming if you choose to do it yourself or hire someone else to manage it.
Drop shipping eliminates this problem by having your suppliers deliver directly to the customer on your behalf. This is much easier than maintaining an inventory of items and means that there will be fewer costs involved in running your business too!
Dropshipping vs. Order Fulfillment: Who is Right for It?
If you are looking to start a business at a lower cost, drop shipping is the way to go. But if you’re looking for a full control, then you may want to consider order fulfillment.
Drop shipping allows you to sell products without having to buy them first. So you don’t have to worry about storage or shipping costs. However, if you want to offer higher-priced items (such as $100+), drop shipper may not allow that transaction anyway, as it can be too risky.
Order fulfillment allows you to buy products in bulk at wholesale prices and deliver them directly to your customers after purchasing online or over the phone. Because you’re buying in bulk, you can often get better deals than if you were buying one item at a time from individual suppliers. This means that your profit margins will be higher (assuming that the product is selling well).
AllValue is a leading provider of cloud-based eCommerce solutions for the retail industry. The AllValue platform helps merchants grow their business by giving them access to various inventory management, pricing optimization, and order management tools.
With AllValue, it is easy to build eCommerce website and operate it, especially with a professional team of AllValue that provides 24/7 assistance. Visit the website for more information on AllValue pricing.