Drop shipping

The route business (also: distance trade, drop shipping, direct trade ) refers to a special logistics business form of trading.

Expiration

Characteristic of this is that a trader buys goods from suppliers and sells them to customers to have no physical contact with the goods. The goods are delivered directly from his supplier ( manufacturer or wholesaler) to its customers. In addition to saving storage and transport costs is usually the customer's request to have only one contact for specific product lines, the reason for a drop shipment. Alternatives to the route delivery, the warehouse delivery, cross-docking and flow-through.

The distance business, ie the direct delivery by the supplier ( a third party ) to the customers of the distributor, differs from the stock business only insofar as the dealer makes in the latter even the delivery. In both cases, the dealer owner of the goods.

Examples

A customer needed a replacement part for a vehicle and turns to the vehicle manufacturer. This will position the bill. In fact, however despatch from the supplier or the wholesaler.

The customer orders goods on the internet shop. The Internet shop owner has no stock, but wholesalers as partners. The wholesaler receives the order from internet shop owner, the goods ( packaged as neutral as possible ) to send directly to its customers.

In both cases, the end customer pays the dealer, this anticipates the actual supplier from. The capital tied up in a private warehouse is thus avoided.

Benefits

The biggest advantage for the dealer is in addition to the low capital commitment for the stock in the exploitation of payment terms. This is because the dealer gets his money directly from the customer in many ways number (credit card, cash in advance, cash on delivery). By negotiating long-term payment terms, the dealer can work with the money. Another advantage is the lower expenses for logistics. So the picking, packing and shipping of the goods.

Disadvantages

The dealer is a substantial part of its supply chain from the hand. This he can control availability, quality of packaging and delivery directly.

Demarcation

To be differentiated from the drop shipment consignment or commission business.