What is Order Drop?
When a seller creates an e-commerce website and sells goods that they do not keep in stock, this is known as an order drop. In order-dropping, the supplier purchases the products from a third party and arranges the shipping to the customer. So, the seller is not required to deal with the product directly.
Significance of Order Drop in E-commerce Logistics
Order drop is an excellent business model to start with because it is simple to implement. One may easily test new startup ideas using “order drop,” which allows you to learn how to identify and advertise in-demand items. Here are some more advantages of order drop to consider:
- Lower Capital Need: Because there is no need to buy and manage inventory in preparation for consumer purchases, there is a need for less capital.
- Financial risk is low: A company is less likely to be exposed to a loss or a decrease in profits caused by excess and outdated inventory since they don’t have to make the initial stock investment.
Prerequisites of Order Drop and How It Works
Instead of keeping stock, drop shipping works by having the manufacturer or wholesaler deliver the products directly to customers to fulfill their orders. The following are the prerequisites for order drop:
- Manufacturers: Manufacturers produce products that are sold to retailers and wholesalers. In drop shipping, the manufacturer is the primary source of products for the sale of goods.
- Logistics service: For the delivery of products from manufacturers or wholesalers to customers, a reliable logistics service with a cash-on-delivery option is necessary.
Use Case With Order Drop
A person decides to start an online store selling wooden crafts using the order drop model due to limited capital. He creates an online store and lists the manufacturer’s craft products for sale. When a customer places an order, the manufacturer then packages and ships the product directly to the customer. This arrangement works well for him because he doesn’t have to worry about purchasing inventory upfront, storing it, or dealing with shipping.