Dropshipping

Dropshipping

Overview

Dropshipping is a streamlined sales and order fulfillment method where businesses do not need to maintain inventory. Instead, the business sells a product and sends a dropship purchase order to a third-party supplier. The supplier then ships the product directly to the customer. This process saves both time and money by eliminating the need for inventory storage and allowing products to be shipped directly from the manufacturer or distributor to the customer.

Roles in the Dropshipping Model

The dropshipping process involves three key roles:

1. The Customer
  • Places an order for a product.
  • Pays the selling company for the product and shipping.
  • Receives the product directly from the third-party vendor.
2. The Selling Company
  • Receives the customer’s order.
  • Sends a dropship purchase order to the third-party vendor.
  • Collects payment from the customer.
  • Pays the third-party vendor for the product.
3. The Third-Party Vendor
  • Receives the dropship purchase order from the selling company.
  • Ships the product directly to the customer.
  • Bills the selling company for the product (and shipping, if applicable).

In this model, the product is shipped only once—from the third-party vendor directly to the customer, streamlining the process and reducing handling costs.

As a CustomBooks™ user, your company can assume any of the three roles described above. Each role has unique steps and requirements, which we will explore in detail in the following sections.

Enabling Dropship Features

To enable the dropship features:
  1. Navigate to Admin Panel > Sales Settings.
  2. Click the Enable Dropship for Sales Order Line Items from the Vendor checkbox.


Dropship Workflow: Your Company as the Selling Company

When your company acts as the selling company in the dropshipping model, your responsibilities include:
  1. Accepting the Customer's Order
    • Record the customer's order using a Sales Order.
  2. Placing the Dropship Purchase Order
    • Order the product from the third-party vendor by creating a Dropship Purchase Order.
  3. Tracking Shipment of Goods
    • Document when the third-party vendor ships the goods using a Dropship Delivery record.
  4. Paying the Vendor
    • Generate a Bill from the third-party vendor for the product.
    • Record the payment to the vendor by creating a Bill Payment.
  5. Billing the Customer
    • Generate and send a Sales Invoice to the customer.
  6. Receiving Payment
    • Collect the payment from the customer and record it as a Cash Receipt.


Creating a Sales Order for Dropshipping

A Sales Order for dropshipping is created similarly to a standard Sales Order, with a few additional steps:

Steps to Create a Dropship Sales Order:
  1. Mark Items for Dropshipping
    • For each product or line item to be dropshipped, select the DS (Dropship) checkbox on the line item.
  2. Specify the Vendor
    • In the DS Vendor field that appears next to the DS checkbox, select the vendor responsible for fulfilling the dropship order.
    • If the item has a Preferred Vendor saved on its item card, the field will automatically populate with that vendor. You can update this if necessary.


Notes: Ensure the DS checkbox and vendor information are correctly entered for each dropship item to ensure accurate order processing. 

Generating a Dropship Purchase Order

After creating a Sales Order, you can generate one or more Dropship Purchase Orders to send to your vendors. These orders will include the customer's shipping address and your company's billing address.

Steps to Create a Dropship Purchase Order:
  1. Generate the Dropship Purchase Order
    • Open the Sales Order.
    • Click the Generate drop-down button and select Dropship Purchase Order.



  2. Review and Complete the Purchase Order
    • The Dropship Purchase Order will be pre-populated with information from the Sales Order.
    • Review the details and complete any fields with missing data.
  3. Verify Shipping Addresses
    • Navigate to the Addresses and Shipping tab to confirm or adjust the shipping and billing addresses.
  4. Save the Purchase Order
    • Click Save or Save and Close to finalize the Dropship Purchase Order.



Info
  • The Dropship Purchase Order will include the customer's "Ship To" address and your company's address for the "Billing To".
  • The Sales Order will reflect the Dropship Purchase Order Status.
  • If a Sales Order has items fulfilled by both your company and a third-party vendor, it may involve both Dropship Delivery and Item Receipts/Shipments.

Creating a Dropship Delivery

A Dropship Delivery document is created when you receive confirmation from the third-party vendor that the product has been shipped. This document records the delivery of goods without adding inventory to your books, as the items are not processed through your own inventory.

Steps to Create a Dropship Delivery Document:
  1. Create the Dropship Delivery
    • Navigate to Sales > Dropship Delivery > Create > New, or generate a Dropship Delivery directly from the Generate drop-down button on the Dropship Purchase Order.



  2. Select the Customer
    • Enter the Customer. A list of open Sales Orders for the selected customer will appear.
    • Choose an open Sales Order to link it to the Dropship Delivery.
  3. Select the Vendor
    • Enter the Vendor name. A list of open Dropship Purchase Orders will be displayed.
    • Select the relevant Dropship Purchase Order to auto-populate the line items from that order.
  4. Review and Update Information
    • Complete or update any other necessary fields.
  5. Save the Document
    • Click Save or Save and Close to finalize the Dropship Delivery.



Printing a Dropship Delivery Document (Proof of Delivery)

A printed Dropship Delivery document is referred to as the Proof of Delivery.
  1. To print, click the Print drop-down button > Proof of Delivery, and choose a print template.



  2. In the Print Preview window, click Print.



    You also have options to Export, Send via Email, and Attach to Document.

Finishing Up

To complete these transactions, create a Sales Invoice and a Cash Receipt to finalize the sales workflow, and a Bill and a Bill Payment to complete the purchases workflow.
  1. Bills and Sales Invoices can be generated from the Dropship Delivery.




Dropship Workflow: Your Company as the Dropshipper

If your company is sending products directly to another company’s customers, you are acting as the dropshipper. In this role, your company may:
  1. Receive a dropship purchase order from the Selling Company (your Customer).
  2. Create a Dropship Sales Quote (optional) and Dropship Sales Order.
  3. Print a Picklist for the warehouse.
  4. Create a Dropship Shipment when the product is ready to be shipped.
  5. Print a Packing Slip for the shipment.
  6. Generate a Dropship Sales Invoice to bill the Selling Company.
  7. Receive payment from the Selling Company and create a Cash Receipt.



Creating a Dropship Sales Quote

To create a Dropship Sales Quote:
  1. Create the Sales Quote
    • Begin by creating a Sales Quote as you normally would. Navigate to Sales > Quotes > Create > New or Go to Quick Menu > Quote (Create).
  2. Enable Dropship
    • Check the Dropship checkbox.



  3. Complete Dropship Details
    • Navigate to the Addresses and Dropship Details tabs and fill in the required fields:
      • Dropship Customer: Enter your customer's customer.
      • Ship To Address/Contact ID: Enter the shipping address and contact details of the dropship customer.
      • Confirm To Address/Contact ID: Enter the address and contact details for confirmation.
      • Ship From Location/Warehouse: Specify the location or warehouse from which the product will ship.
      • Bill To Address: Enter the billing address for your customer.



  4. Save the Sales Quote
    • Click Save or Save and Close to save the Dropship Sales Quote.



Printing a Dropship Sales Quote

To Print a Dropship Sales Quote
  1. Select the Print Option
    • Click the Print drop-down from the Dropship Quote and choose Sales Quote.
    • Select the print template you wish to use.



  2. Review and Edit
    • Review the Print Preview.
    • If necessary, make any edits to the template.
  3. Print or Send
    • Click Print to print the document, or select Send to deliver it via email.



Creating a Dropship Sales Order

When you receive an order from the Selling Company (your customer), a Dropship Sales Order is created. This Sales Order lists the Selling Company as the Bill To address and the End Customer as the Ship To address.

To Create a Dropship Sales Order:
  1. Generate the Sales Order
    • From the Dropship Sales Quote, click Generate > Sales Order.
      – OR –
    • Navigate to Sales > Sales Order > Create > New.



  2. Enable Dropship
    • Check the Dropship checkbox in the Main tab.
  3. Enter Customer and Sales Order Details
    • Fill in the following fields:
      • Customer (Selling Company): Select from the drop-down.
      • S.O. Date: Enter the Sales Order date.
      • Promise Date: Enter the promise date.
      • S.O. #: Provide the Sales Order number.
      • Dropship P.O./Reference #: Enter the reference number.
      • Terms: Select the payment terms from the drop-down.



  4. Complete Addresses and Dropship Details
    • Go to the Addresses and Dropship Details tab.
    • Enter the Dropship Customer and the Ship To address.
    • Enter the Customer's Confirm To and Bill To contact ID/address.



  5. Finalize the Sales Order
    • Fill out all necessary fields.
    • Follow the standard instructions for creating a Sales Order to complete the process.
    • Click Save or Save and Close.


  • When generating a Dropship Sales Order from the Dropship Sales Quote, the dropship customer and address will automatically be carried over.
  • When creating a Shipment document for the Dropship Sales Order, check the Use Shipment checkbox on the Main tab.
    •

    Printing a Dropship Sales Order

    To Print a Dropship Sales Order:
    1. Select the Print Option
      • Click the Print drop-down menu and choose Sales Order-Standard.
      • Select the print template you wish to use.



    2. Review and Edit
      • Review the Print Preview.
      • If necessary, make any edits to the template.
    3. Print or Send
      • Click Print to print the document, or select Send to deliver it via email.



    Printing a Pick List

    A Pick List is a document used in a warehouse to guide staff in locating and gathering items for an order. Printing a pick list ensures efficiency, accuracy, and convenience during the picking process while serving as a backup and proof of completion.

    To Print a Pick List:
    1. Select the Print Option
      • Click the Print drop-down from the Dropship Sales Order and choose Pick List.
      • Select the print template you wish to use.



    2. Review and Edit
      • Review the Print Preview.
      • If necessary, make any edits to the template.
    3. Print or Send
      • Click Print to print the document, or select Send to deliver it via email.



    Creating a Dropship Shipment

    A Dropship Shipment document is created to record the shipment of a dropship sales order to the end customer.

    To Create a Dropship Shipment:
    1. Generate the Dropship Shipment
      • Open the Dropship Sales Order document.
      • Click Generate and select Shipment.



    2. Review and Complete the Shipment
      • The Dropship Shipment will be pre-populated with information from the Sales Order.
      • Review the details and fill in any fields with missing data.
    3. Confirm or Adjust Addresses
      • Navigate to the Addresses and Dropship Details tab.
      • Confirm or adjust the shipping and billing addresses as needed.
    4. Save the Shipment
      • Click Save or Save and Close to complete the Dropship Shipment.



    Printing a Packing Slip

    A Packing Slip is a document included with a shipment that lists the items, quantities, and details of the order.

    To Print a Packing Slip:
    1. Select the Print Option
      • Click the Print drop-down from the Dropship Shipment and choose Packing Slip.
      • Select the print template you wish to use.



    2. Review and Edit
      • Review the Print Preview.
      • If necessary, make any edits to the template.
    3. Print or Send
      • Click Print to print the document, or select Send to deliver it via email.


    Finishing Up

    To complete this workflow and finalize the transaction, create a Dropship Invoice and a Cash Receipt once the selling company has made the payment.
    1. Generate the Dropship Sales Invoice from the Dropship Shipment document or the Dropship Sales Order
    2. Then generate a Cash Receipt from the created Dropship Sales Invoice.




    Combination Workflows

    Some scenarios that can be handled include:
    • Sales Orders involving a combination of products shipped by you and others shipped by a third party. In this case, you'll need to create a dropship purchase order, a dropship delivery, and a shipment or dropship shipment



    • Receiving a Dropship Sales Order from a selling company and having a fourth party dropship the product. In this case, instead of shipping the products from your own warehouse through a Dropship Shipment, you create a Dropship Purchase Order (and Dropship Delivery) from the Dropship Sales Order to have the fourth party dropship the products.

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