Dropshipping and Why You Need a Fulfillment Service
Dropshipping and order fulfillment companies are often referred to indiscriminately in the retail industry. However, while they both provide solutions for businesses looking for outsourced fulfillment services, they do it in very different ways.
What is the Difference Between Drop Shipping and Third Party Order Fulfillment?
Dropshipping allows businesses to sell products without ever having to buy or store inventory. When a customer makes a purchase, the retailer simply passes the order information to the wholesaler or manufacturer, who then ships the items directly to the customer's door. Conversely, third-party order fulfillment is an outsourced fulfillment option in which you hire a business to store items, select and pack orders, and manage shipping logistics on your behalf.
Whereas both purchasing experiences may seem identical to the customer, yet these two approaches are extremely different behind the scenes, and knowing these differences is crucial for running a successful business.
Business owners use third party logistics for several reasons, mainly to increase client base, reach new markets, or improve customer experience.
In this blog post, we will describe 3 main differences between dropshipping and third party logistics, and answer the question of why using fulfillment companies is more efficient when it comes to managing orders.
- Product Quality
Businesses that use the dropshipping model never own or store the merchandise. Conversely, the manufacturer retains products until they are sent to customers. The seller pays for products as they are purchased, so no inventory investment is necessary. This reduces their overall overhead costs since storage and warehouse personnel expenditures are eliminated.
While this e-commerce method reduces financial risk, it generally implies that the seller is uncertain about the quality of their products. Dropshipping merchants depend on evaluations provided by other sellers to determine whether the quality of their products will satisfy the customers.
At Tu Pack, we run continuous screenings to ensure high product quality, increasing brand reliability. Using third-party fulfillment services increases customer satisfaction, allowing reducing returns and refunds.
2. Order Fulfillment Time
When a customer purchases a product from a drop shipping business, the order is routed to the manufacturer. Certain dropshipping systems can streamline this operation, but it still requires much attention. Sellers must keep an eye on their orders to verify they are being duly handled and contact their suppliers if any unexpected problems arise.
Fulfillment companies also provide automated order routing, but their efficiency comes with a far more dependable assurance. This enables merchants who work with them to spend less on processing and tracking orders.
Dropshipping sellers often need to devote a significant amount of time to answer customers' queries due to delays in delivery and inconsistent quality control. Most drop shipping providers are located in Asia, so distance and linguistic barriers may considerably affect order fulfillment times.
Working with a fulfillment company helps you reduce order fulfillment time, making order execution more predictable and manageable, thus minimizing the number of complaints and negative reviews.
- Additional Services
Drop shippers produce and dispatch merchandise to the wholesale market, however, they provide no extra fulfillment services, such as customer support and order tracking to retail clients. Therefore, you must ensure that your customer support is good enough to manage any issues that arise between the manufacturer and your customers.
Tu Pack account service teams will help you save time on handling return and refund procedures, and answering customer queries, so you can focus on running your business.