Happy New Year!
A member of the eBay Sellers group on LinkedIn recently posed a question about drop-shipping; a topic that brings back some painful lessons for me. I first started thinking about this several years ago, while working at Jewelry Television. There, we were looking into an enterprise-wide drop-shipping program; of course, I wanted to see if we could add these types of SKUs to our eBay and Amazon stores. There are some compelling advantages to the successful implementation of a drop-ship program; but there are also some disastrous results if your execution is less-than-perfect; and unfortunately, you don’t control the whole ordering and fulfillment process.
So, before I get into the advantages and disadvantages, and then talk about my own experience, let’s define what drop-shipping is. For the purposes of this blog post, drop-shipping is simply having a 3rd-party supplier fulfill orders that you take on your site. So, for example, at JTV.com, we had products listed from a supplier called Quality Gold, a wholesaler. Customers ordered the product on JTV.com; we placed orders with Quality Gold, and Quality Gold shipped the orders directly to the customer. We did not buy the product prior to the sale, and never inventoried it.
Now, it’s important to remember one subtle distinction: a well-executed drop-ship program can be great for all parties when it’s implemented on a company’s website; but typically, drop-shipping is anathema to marketplace sites such as eBay, Amazon, Sears Marketplace, or Rakuten.com.