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:Navigate to Admin Panel > Sales Settings.
Click the Enable Dropship for Sales Order Line Items from the Vendor checkbox.
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Dropship Workflow: Your Company as the Selling Company
When your company acts as the selling company in the dropshipping model, your responsibilities include:
Accepting the Customer's Order
Placing the Dropship Purchase Order
Tracking Shipment of Goods
Billing the Customer
Receiving Payment
Collect the payment from the customer and record it as a Cash Receipt.
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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:
Mark Items for Dropshipping
Specify the Vendor
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:
Generate the Dropship Purchase Order
Open the Sales Order.
Click the Generate drop-down button and select Dropship Purchase Order.
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Review and Complete the Purchase Order
Verify Shipping Addresses
Save the Purchase Order
Click Save or Save and Close to finalize the Dropship Purchase Order.
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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:
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.
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Select the Customer
Select the Vendor
Review and Update Information
Save the Document
Click Save or Save and Close to finalize the Dropship Delivery.
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Printing a Dropship Delivery Document (Proof of Delivery)
A printed Dropship Delivery document is referred to as the Proof of Delivery.
To print, click the Print drop-down button > Proof of Delivery, and choose a print template.
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In the Print Preview window, click Print.
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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.
Bills and Sales Invoices can be generated from the Dropship Delivery.
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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:
Receive a dropship purchase order from the Selling Company (your Customer).
Create a Dropship Sales Quote (optional) and Dropship Sales Order.
Print a Picklist for the warehouse.
Create a Dropship Shipment when the product is ready to be shipped.
Print a Packing Slip for the shipment.
Generate a Dropship Sales Invoice to bill the Selling Company.
Receive payment from the Selling Company and create a Cash Receipt.
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Creating a Dropship Sales Quote
To create a Dropship Sales Quote:
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).
Enable Dropship
Check the Dropship checkbox.
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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.
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Save the Sales Quote
Click Save or Save and Close to save the Dropship Sales Quote.
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Printing a Dropship Sales Quote
To Print a Dropship Sales Quote
Select the Print Option
Review and Edit
Print or Send
Click Print to print the document, or select Send to deliver it via email.
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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:
Generate the Sales Order
Enable Dropship
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.
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Complete Addresses and Dropship Details
Finalize the Sales Order
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:
Select the Print Option
Review and Edit
Print or Send
Click Print to print the document, or select Send to deliver it via email.
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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:
Select the Print Option
Review and Edit
Print or Send
Click Print to print the document, or select Send to deliver it via email.
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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:
Generate the Dropship Shipment
Review and Complete the Shipment
Confirm or Adjust Addresses
Save the Shipment
Click Save or Save and Close to complete the Dropship Shipment.
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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:
Select the Print Option
Review and Edit
Print or Send
Click Print to print the document, or select Send to deliver it via email.
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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.
Generate the Dropship Sales Invoice from the Dropship Shipment document or the Dropship Sales Order
Then generate a Cash Receipt from the created Dropship Sales Invoice.
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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
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- 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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