Now that you understand the players involved, let’s take a look at how a drop shipped order gets processed. To illustrate, we’ll follow an order placed with our theoretical store, Phone Outlet, an online merchant that specializes in accessories for smart phones. Phone Outlet dropships all of its products directly from a wholesaler we’ll call Wholesale Accessories.
Here’s a sample of how the entire ordering process might look:
STEP 1 – CUSTOMER PLACES ORDER WITH PHONE OUTLET
Mr. Allen needs a case for his new smartphone and places an order via Phone Outlet’s online store. Once the order is approved, a few things happen:
- Phone Outlet and Mr. Allen get an email confirmation (likely identical) of the new order that is automatically generated by the store software.
- Mr. Allen’s payment is captured during the checkout process and will be automatically deposited into Phone Outlet’s bank account.
STEP 2 – PHONE ACCESSORY OUTLET PLACES THE ORDER WITH ITS SUPPLIER
This step is usually as simple as Phone Outlet forwarding the email order confirmation to a sales representative at Wholesale Accessories. Wholesale Accessories has Phone Outlet’s credit card on file and will bill it for the wholesale price of the goods, including any shipping or processing fees.
Note: Some sophisticated dropshippers will support automatic XML (a common format for inventory files) order uploading or the ability to place the order manually online, but email is the most common way to place orders with dropshipping suppliers because it’s universal and easy to use.
STEP 3 – WHOLESALE ACCESSORIES SHIPS THE ORDER
Assuming the item is in stock and the wholesaler was able to successfully charge Phone Outlet’s card, Wholesale Accessories will box up the order and ship it directly to the customer. Though the shipment comes from Wholesale Accessories, Phone Outlet’s name and address will appear on the return address label and its logo will appear on the invoice and packing slip. Once the shipment has been finalized, Wholesale Accessories will email an invoice and a tracking number to Phone Outlet.
Note: The turnaround time on dropshipped orders is often faster than you’d think. Most quality suppliers will be able to get an order out the door in a few hours, allowing merchants to advertise same-day shipping even when they are using a dropshipping supplier.
STEP 4 – PHONE OUTLET ALERTS THE CUSTOMER OF SHIPMENT
Once the tracking number is received, Phone Outlet will send the tracking information to the customer, likely using an email interface that’s built in to the online store interface. With the order shipped, the payment collected and the customer notified, the order and fulfillment process is complete. Phone Outlet’s profit (or loss) is the difference between what it charged Mr. Allen and what it paid Wholesale Accessories.