How Does Dropshipping Work?

How Does the Dropshipping Process Work?

If you’re thinking about running a dropshipping business, you’re likely wondering what role you’ll play in the process. Will your supplier provide customer service? How will you submit orders? Whose logo and address will appear on the invoice and packing slip?

Let’s take a look at some of the finer details of using a dropshipping company to see if this is the right model for your business.

The Order Process

Although each dropshipping company will be different, most suppliers accept orders via email (Note: some also accept orders online, by phone, or even in bulk via a specially formatted CSV file). When a customer places an order at your store, an order confirmation email is sent to your supplier, who will then pick, pack, and ship the order to your customer assuming the product(s) is in stock. Your supplier will use their own shipping account to pay for shipping, but they’ll bill your account for the price of goods, as well as any applicable processing and shipping fees.

Packing Slips & Invoices

Dropshippers are invisible. That means that when a customer receives their package, your company’s name and logo will appear on the invoice, packing slip, along with your name and address on the return address label. Your customers are never aware that you have a dropshipping supplier – they exist entirely behind the scenes, allowing your business to maintain brain cohesiveness.

How do Returns Work?

Each dropshipping company has their own policies regarding customer returns. Many suppliers issue a Return Authorization (RA) number, which is then provided to the customer along with the warehouse’s address. Once the supplier has received the product, your account will receive a credit for the item. With funds in possession, you can then proceed to refund the customer who requested the refund. Many suppliers will cover the shipping cost if the returned item is defective, however, for non-defective items, the customer will usually be responsible for paying the return shipping fees.

What about International Shipping?

Not every dropshipper ships internationally. International shipments presents a number of complexities, including increased shipping costs and fees, a higher potential for fraud, and increased order processing times. Approximately half of dropshippers ship internationally, so be sure to check with the companies you’re exploring if this is a feature essential to your business.

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