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The Difference Between Drop Shipping And Fulfillment Houses

The most important part of handling orders is the fulfillment of the orders. It involves packaging and shipping of the products to the customers. You may opt for the services of the fulfillment houses or drop shippers, the popular solution providers today. To decide which type of fulfillment service to use, you need to know the difference between the two types. This will help you understand which will be best suited for your order fulfillment needs. Once you decide on the service to be used, you can work it out with the service provider stating your expectations clearly.

The basic difference in the drop shippers and the fulfillment houses lies in the way they store the merchandise for you. With the fulfillment house you are the owner of the merchandise and the fulfillment company only stores the goods for you, picks it up from the storage area and ships its to the customers. The drop-shipping concept differs in the fact that the wholesaler is the one who owns the goods and ships them directly to the customer. They provide services to the retailers also. The scenario here is that you own the customer database while the drop shipper is the owner of the goods and pays you a sales commission in addition to the wholesale price of the goods.

Drop shipping seems like a hassle-free option, where in you just sell the product to the drop shipper and forget about it. However, in case of the fulfillment house, the ownership lies with you, so you can nurture the brand name of your product which is of higher relevance in your plans to create a big brand name in the market. Thus fulfillment houses are more suited from the point of view of your long-term interests.

If you are planning to start a business on a low scale then it is better to opt for a fulfillment house. This is because compared to the drop shippers they are in a better position to handle drastic increase in shipments. Some fulfillment companies have a minimum requirement and if your orders are less than 10 per day you should go in for a fulfillment company that can render you such a service. In comparison, the drop shippers do not have any minimum amount requirements; they may cater to any size of the orders, small or big.

The risk of damage or shrinkage of goods in case of fulfillment houses lies with you, as you are the owner. Unless they take the responsibility or are proven to be responsible, the costs will have to be incurred by you. However, in case of drop shipping the ownership gets handed over to the wholesaler. Any risk on damage is entirely upon him.

There are the problems of having to rely on the wholesalers for supply to the customers. As much as it is advantageous to have the packing and shipping responsibilities handed over, you do not have any control on the timely supply of the products. Each type has its own advantages and disadvantages. Depending upon the needs of your business you may find the utility of either of the services to be favorable.

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The Difference Between Drop Shipping And Fulfillment Houses