Dropshipping Versus Third-Party Fulfillment
FAQs
What is dropshipping?
Dropshipping is an ecommerce fulfillment method where the seller displays products for sale but does not actually keep inventory. Instead, when an order comes in, the seller purchases the item from a third party supplier or manufacturer, who then ships it directly to the customer.
What is third-party fulfillment?
Third-party fulfillment is when an ecommerce seller stores their inventory in a warehouse operated by a separate company. That company manages storage, order picking/packing, and shipping on behalf of the seller.
What are the main pros of dropshipping?
The main pros of dropshipping include lower upfront costs since you don't have to purchase inventory, easier scalability as you grow, and the ability to test products more easily without getting stuck with unsold stock.
What are the main cons of dropshipping?
Cons of dropshipping include less control over product quality, longer and less reliable shipping times, and more customer service issues to handle if orders have problems.
What are the pros of 3PL fulfillment?
Pros of 3PL fulfillment include more control over product quality, the ability to customize packaging, shorter shipping times, and variable storage costs that can save money long-term.
What are the cons of 3PL fulfillment?
Cons include tying up more capital in inventory, potential limits on product selection, and still having to handle core inventory management responsibilities like monitoring stock levels.
Which is better for my business?
The best fulfillment method depends on your product types, business size, growth goals, and more. Compare your needs to the pros and cons of each to decide which model fits you best.
