Shipping And Fulfillment Options For E-Tailers

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There are myriad steps e-tailers must take to bring a product to market. After determining a need in the market, a savvy e-tailer develops or finds a product that will fill that need, determines the price of the product, and develops a plan to market it successfully. Determining how to fulfill orders and ship it them is another critical step of this process. E-tailers must choose how their customers will receive their orders, how much they’ll charge for shipping (or whether they’ll offer free shipping and include the cost in the product’s price), and whether to offer free returns and exchanges.

Here’s a closer look at the two primary methods that e-tailers use to ship products.

E-commerce fulfillment refers to purchasing stock in wholesale amounts, marketing and selling them online, and fulfilling orders in-house. With e-commerce fulfilment, e-tailers must have physical inventory of what they sell. The products they sell and the volume they do will determine how much space they need to maintain that inventory.

Drop-shipping, however, allows e-tailers to sell products without having to maintain a physical inventory. While the e-tailers still create online stores and market their products, they do not fulfill orders. Instead, they hire a company to handle that part of the process. They don’t have to purchase inventory, which makes it less expensive to launch an e-tail business than if they provided their e-commerce fulfillment.

There are pros and cons to each method. E-commerce fulfillment lets business owners that have manufactured their products, or sourced and branded products, handle all aspects of the fulfillment and shipping process. This gives the owner complete control over the process instead of relying on another company to fulfill the orders. One drawback of this method is that the e-tailer needs more capital to invest in inventory before the business can be launched. If the demand for your product doesn’t match what you have purchased, you may wind up taking a loss. In general, e-commerce fulfillment offers higher profit margins than drop-shipping.

E-tailers that opt for drop-shipping needn’t come up with as much capital, as they don’t maintain inventory. This makes it an appealing option for new businesses. Your overhead is much lower, but you must ensure that you choose a reliable vendor to supply and fulfill your orders. Even with a reliable vendor, you will have minimal control over how products are delivered, which may cause customer service issues. Your profit margins are also lower than if you opt for drop-shipping.

The accompanying resource, by AMS Fulfillment, explains more about the differences between the two.

This infographic was created by AMS Fulfillment, a fufillment services company

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Hi, I'm James George, the founder of Mind My Business NYC and author of this blog. I am an entrepreneur and internet marketer. My wish is that this website helps you to grow your business and achieve your goals.

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