Dropship and EDI

Drop-shipping is to send purchased goods directly from the vendor or manufacturer to a customer or retailer with no immediate distributor but billed through a third party. It is a retail fulfillment method where a store doesn’t keep the product it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and shipped directly to the customer on behalf of retailers. This process removes the need for a warehouse/distribution center and can save a considerable amount of money for the retailer.

How Drop-shipping works

  • Retailer sets up items on their website with the help of the vendor
  • Vendor provides an inventory-feed
  • The consumer places order with the retailer
  • The retailer places an order with the vendor
  • Vendor acknowledges if they have received the order and can fulfill the request
  • Vendor ships to the consumer
  • Vendor provides ASN (856) for drop-ship to retailer
  • Vendor sends the invoice (810) to the retailer for completed order
  • The retailer provides the consumer with continuous order/shipment information.

Here, EDI plays a crucial role as it enables all order documentation to be sent between the third-party drop-ship vendor and retailer quickly and efficiently. It enables a seamless order lifecycle.

Documents need to exchange with vendors to make drop-ship happen:

Typical EDI order documents exchanged include EDI 850 (purchase order), 855 (purchase order acknowledgment), 856 (advance shipment notice), 810 (invoice), etc. Electing documents to transmit electronically eliminates error-prone emails, phone/fax messages from the order fulfillment lifecycle.

Benefits of Automated Drop-shipping

Creating an automated drop-ship program or seeking out an automated drop-ship capable vendor is like multiplying your efforts and opportunities. Few key benefits of automated drop-ship include:

  • The power to scale
  • Minimal risk and cost
  • More products, more profit
  • Convenience and reduce labor
  • Satisfy more customers
  • Potentially grow market share

However, as you may know, sometimes EDI can be delicate to handle; EDI by Design ensures complete control and visibility of fulfillment and brand-management, resulting in high levels of customer service, and on-time shipments for drop-ship by fulfilling complete cycle from PO to invoice within 24 hrs in most of the cases. 

Improve your existing drop-shipping capabilities with EDI by Design.

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