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Dropshipping & 3pl

Open an online store without merchandise with Dropshipping

Create a Dropshipping online store and forget about inventory management, packaging and shipping.

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What is Dropshipping?

This is a type of retailing in which the retailer does not hold the merchandise in inventory, but takes and passes the order to the wholesaler, who ships the merchandise on behalf of the retailer and sends it directly to the end customer.

Step 01

Your customer places an order in your online store.

Step 02

Your store automatically sends the order to your dropshipping supplier.

Step 03

Your dropshipping supplier prepares your customer’s order.

Step 04

Your dropshipping supplier sends the order directly to your customer.

What is 3pl?

Third-party logistics (or 3PL) refers to the outsourcing of e-commerce logistics procedures, such as inventory management, warehousing and fulfillment, to an outside company. With the tools and infrastructure to automate retail order picking, 3PL providers enable e-commerce retailers to achieve more.

Step 01

Your customer places an order in your online store.

Step 02

The order arrives at the logistics company, which will proceed to prepare it for shipment to the customer.

Step 03

Your warehousing provider sends the order with your brand name directly to the customer.

DROPSHIPPING VS. 3PL

3PL providers act as intermediaries between the retailer and the online shopper. A retailer buys wholesale products to sell online and delivers them to a third-party logistics company.

Since the e-commerce website is linked to a 3PL company’s picking system, the retailer receives an online order. The orders are sent to the picking center. The third-party logistics provider picks, packages and ships the products to the buyer. As a result, most retailers avoid dropshipping and prefer to ship their inventory to a third-party logistics provider.

So how are they similar and how are they different?

Similarities: The retailer does not handle the items in either the dropshipping or 3PL procedure. This means that third-party companies handle the packaging and shipping of the products, which makes things easier for online retailers.

Differences: For starters, the 3PL method involves the retailer buying products in bulk and delivering them to an outside organization. Therefore, if the store sells potentially expensive or highly specialized products, it will hire a 3PL to avoid having to have an in-house fulfillment department. In dropshipping, it is not necessary to have your own inventory.

In addition, producers are responsible for shipping products to customers in dropshipping, whereas with 3PL, the 3PL company handles everything from warehousing to packaging to shipping.

Dropshipping Advantages

  • You don't need a lot of money to get started:

    Since you don't have to buy in bulk, you don't need a lot of money to get started with your online store, which makes it attractive for beginners.

  • Getting started is easy:

    Of course, since you don't need to have all the products in the store, starting an e-commerce company with such a simple business strategy is easy. Calculate your profit margin, create an e-commerce website and start marketing your products to get orders.

  • Flexible:

    It is not necessary to start a business in a specific location. The business model does not impose restrictions on location or time. For example, you can dropship from China while running your online business from another country.

  • A wide range of products can be handled:

    You don't need to be detailed about the things you want to offer. You can sell a wide variety of items and have the manufacturers of the products take care of packaging and delivery.

Disadvantages of Dropshipping

  • Its benefits are limited:

    When you buy something in quantity, you usually save a lot of money. The larger the quantity purchased, the bigger the discount. With drop shipping, you buy things one at a time. As a result, you will have to pay a high amount. In the end, it decreases your profit margin.

  • Product control is limited:

    You are dependent on a manufacturer when you adopt the dropshipping approach. As a result, you do not have full control over product availability. Sometimes, manufacturers give priority to their direct customers or other partners. As a result, it is impossible to know how much inventory is available on any given day, especially during peak seasons or vacations.

  • Shipping is more expensive and slower:

    You have no control over the speed of shipping when you use the drop ship option. You also have no way of knowing where the manufacturer is shipping from for that particular order. As a result, the shipping process can be slower and more costly. Late delivery can hurt your customer satisfaction rate in the long run.

3PL advantages over Dropshipping

As the best fulfillment option available, 3PL offers certain unique advantages that surpass dropshipping in many ways.

  • Unlimited inventory volume:

    You have a variety of alternatives for warehousing large volumes of items using a 3PL service. Simply put, inventory warehousing has no limits. You don't need to spend a lot of money on storage. Spainbox provides free storage for 90 days.

  • Highly adaptable and scalable

    Depending on your demands, a 3PL company can help you reduce or add more space. As a result, it gives you more options to expand your business. Great convenience at a low price. 3PL services are often low-cost, but they also offer more convenience. In terms of cost and convenience, their services outperform other picking options.

  • It saves time and money.

    Order picking can save you a lot of money and time if you outsource it. A professional 3PL company can take care of a number of tasks that would otherwise cost you more to do on your own. You save money that would otherwise be spent on shipping, technology, warehouse space and office staff.

  • Customer satisfaction is important.

    Keeping track of your own inventory can be costly. Packing and shipping orders to multiple locations can be stressful at the same time. By shipping orders quickly, the 3PL improves customer satisfaction.

Spainbox offers Branded Picking Solutions to help your company grow. We offer customized packaging, kit assembly and marketing inserts. We have an efficient Picking Center to get your orders to you faster.

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Using a Distribution Company for Drop Shipment

Both drop shipping and 3PL have their own advantages. You can use either method depending on your current business needs.

You can also combine both methods. You can use 3PL if you have a well-established product line. Dropshipping is also a good option if you want to test new products before putting them in stock.

At Spainbox, we take care of receiving, packing and delivering the goods to the buyer, as well as any returns that may arise. Outsourcing allows the retailer to concentrate on sales and expansion of the online store. As a result, quality control and customer service are improved.

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