Retail Business Processes – Drop Shipping

Businesses are constantly seeking innovative strategies to streamline operations and enhance customer satisfaction.

One such strategy that has gained significant traction is drop shipping, a business model that allows retailers to offer a wide range of products without maintaining an extensive inventory. This discussion delves into the intricacies of drop shipping, highlighting its benefits and operational processes. By examining how retailers can leverage drop shipping for niche products and the critical role of technology in facilitating seamless transactions, we aim to provide a comprehensive overview of this dynamic business process.

From the initial sale on a retailer’s e-commerce platform to the final delivery to the customer, we explore the end-to-end workflow that makes drop shipping a viable and efficient retail strategy.

Today we’re going to talk about drop shipping. Last week we looked at the overall layout of some of the key systems in a retail scenario. What we’re going to look at today is one of the business processes. Drop shipping is where you sell something on your website that you don’t actually own. And a lot of retailers do this for specific niche products, sometimes for flowers, sometimes for wine, that kind of thing, where it might not be a core product, but you just sell it anyway and badge it as your own.

And so what typically happens is you’ll have your website, your e-commerce platform, and when you sell an e-commerce item that needs to be drop shipped, you’ll send a message through via some kind of API. And then we need to kick off a workflow behind the scenes to get all that work done. Now, typically, you’ll want to tell your ERP system that you’ve got that order, and then your ERP system might need to create a purchase order, send to the supplier, who will then fulfil the order for your customer. So as part of that workflow, they’ll create a purchase order in the ERP via their API, and then with those purchase order details, they’ll send that to the supplier via their API. And you can have multiple suppliers, and you might need some routing logic to say which supplier gets which order, all that kind of thing.

But then at the same time, the supplier needs to then go and do that work. They need to ship those goods and when they’ve shipped them, they need to tell you. And so they’ll then call back into an API that you’ve provided for them that will have some kind of fulfilment workflow where we then need to go and tell the ERP that that order is complete. And then you’ll probably want to tell your e-commerce platform that the order is complete so that it can be marked there. The customer is informed and satisfied that the end-to-end process has been completed.

And then even one of the things we can do is the ERP at some point will need to tell the bank to go and pay that supplier. We can automate all that, but that’s just an example of the kind of integration you might find in a drop shipping scenario.

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