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Drop ship suppliers based in China have increasingly been able to compete with same-country distributors because of improved logistics for small packets and the easing of trade barriers. This is largely due to the increasing ease of e-procurement and the growing part that the internet is playing in commerce. Many drop ship companies have emerged in China, many of which offer wholesale and drop shipping services to both companies and individuals. This puts a premium on timely and accurate information provision by the seller on both sides of the purchase, both before and after it is made. Likewise order fulfilment and shipping delays are beyond the seller's control, yet can reflect badly on the purchaser's ultimate satisfaction with their transaction.

They also can be extended, beyond the control of the seller. Such potential delays in order fulfilment are not always known, or even when known disclosed, by a seller. Products may be listed by a drop shipping retailer as available but actually be back-ordered either with the wholesaler or the item's manufacturer. Sellers who use this method can be suspended from eBay. This includes drop shipping methods in which a seller fulfills an order by purchasing the item from another online marketplace and having the item shipped to the customer. However, some of the drop shipping methods used by sellers are not allowed under the eBay terms of service. The seller's profit is the difference between the selling and the wholesale prices, minus any pertinent selling, merchant, or shipping fees accruing to them. A seller will list an item as new, and have purchased items shipped directly from the wholesaler to the customer. Sellers on online auction sites such as eBay also use drop shipping as way of distributing products without handling the stocking the items sold. The retailer may arrange for the goods to be shipped directly to the customer from the manufacturer or distributor. In unusual circumstances drop shipping can occur when a small retailer (that typically sells in small quantities to the general public) receives a single large order for a product. The ultimate order fulfiller might also include a customised packing slip, including details such as the retailer's company name, logo, and contact information. This can be achieved by "blind shipping" (shipping merchandise without a return address corresponding to the seller), " private label shipping" (having merchandise shipped from the wholesaler with a return address customised to the retailer), or utilising a fulfillment house. A virtual retailer only has a website.ĭrop shipping retailers are not required to disclose the practice, nor, as with any other retailer, the wholesale source of the products they offer. A physical retailer may keep potential drop shipped items on display, provide details on mail order items via a catalogue, or maintain a website with information available only online.

It may be eliminated entirely, or combined with drop shipped order fulfillment business model. As in any other form of retail, the seller makes their profit on the difference between an item's wholesale and retail price, less any pertinent selling, merchant, or shipping fees accruing to them.Ī drop shipping business model does not require a brick and mortar store. By doing this, it eliminates the costs of maintaining a warehouse – or even a brick and mortar storefront, purchasing and storing inventory, and employing necessary staff for such functions. As such, the retailer is responsible for marketing and selling a product, but has little or no control over product quality, storage, inventory management, or shipping. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.

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