A fulfillment method where suppliers or manufacturers ship products directly to end customers, bypassing the retailer’s warehouse entirely. The retailer maintains responsibility for customer service, order processing, and payment collection while never physically handling the inventory.
This approach significantly impacts warehouse operations by reducing storage requirements, handling costs, and inventory investment. However, it creates challenges for order visibility, quality control, and delivery coordination. Warehouse management systems must integrate with supplier networks to track shipments, manage split orders (when some items drop ship while others ship from inventory), and maintain accurate delivery promises to customers.
For example, an electronics retailer might stock popular items in their warehouse for fast shipping while drop shipping specialized accessories directly from manufacturers. This hybrid approach optimizes inventory investment while maintaining product variety. Effective WMS integration ensures seamless order orchestration, whether items ship from the warehouse, supplier locations, or a combination of both sources.
