Managing the Complications of Drop Shipping on Marketplaces

June 1, 2017

Marketplaces ChannelAdvisor By ChannelAdvisor

It’s 2 p.m. on a Tuesday when two identical items are purchased by two separate customers. The first is sold and fulfilled by Amazon; the second is bought from a third-party retailer, to be delivered by the partnering manufacturer.

Package #1 is on the customer’s doorstep by Thursday at noon; Delivery of package #2 is pushed to the weekend due to a delay in receiving and approving the order from the retailer.

By Monday, both customers are experiencing issues with their orders. The first makes a seamless exchange; the second waits for hours as the retailer attempts to determine where the return should go.

This is one example of the many complications that can arise when drop shipping on marketplaces.

While drop shipping has been around for decades, its presence on marketplaces has swelled in recent years — and so have the number of issues faced by third-party retailers and vendors.

Fortunately, most issues are relatively easy to resolve.

Drop Shipping on Marketplaces

Drop shipping has become a key component of e-commerce in recent years, with good reason. Online retailers can offer many more items without having to invest in warehousing, and manufacturing brands can get their products in front of more customers.

With drop shipping, a retailer will offer items it doesn’t actually stock. When an order is placed, the retailer purchases the item from a brand manufacturer or other third party and directs that company to ship directly to the customer on its behalf.

When drop shipping first arrived on the e-commerce scene, many consumers were blind to the fact that someone other than the actual retailer had stored, packaged and shipped the products that were being delivered to their doors. In their eyes, the omnichannel or marketplace retailer was handling it all.

That’s no longer the case.

The massive growth of marketplaces led to a new trend: As countless online retailers turned to third-party (3P) selling on established marketplaces like Amazon and Walmart, consumers became accustomed to seeing “sold by” and “ships from” when placing orders. As long as they were getting the best price and fastest delivery, it didn’t matter where the product was warehoused or who was sending it.


Any time the actual fulfillment experience failed to meet expectations, consumer trust was lost. And that’s where things started to go wrong.

When the Drop-Shipping Dream Turns into a Nightmare

Drop shipping can open doors to new revenue streams — but only when it’s done right.

Now that many consumers are aware of the presence of drop shipping, their expectations for these arrangements are high. Online shoppers have become accustomed to fast and free or low-cost — and expect that level of service whether an order is being fulfilled by a drop shipper or a marketplace retailer.

As a drop shipping business grows, so do problems for unprepared parties. Retail orders must be entered into the distributor’s portal, and the actual process of shipping items can become maddeningly slow when those entries are even a day behind.

Many online retailers and brands have learned the hard way that issues will escalate quickly when there’s a lack of proper integrations, and that poor transfer of data can lead to back orders, complicated returns and customer service nightmares.

Managing Marketplace Drop Shipments

The good news? Drop shipping in the marketplace realm doesn’t have to be hard. As long as the right processes are in place before you begin to leverage drop shipping or fulfill orders on behalf of retailers, it can be the basis for a very lucrative business model. If you’ve been struggling to make drop shipping more productive and profitable, it could be because you’re in need of a new technology solution.

Boxes on a conveyor belt. Drop shipping blog post.For example: At ChannelAdvisor, we’ve simplified the order fulfillment process for users with an Expanded Product Suite feature that’s designed to streamline data transfer between retailers and vendors. Our comprehensive support for drop shipping allows retail orders to be quickly received, approved and sent through direct integrations with existing fulfillment processes.

Having the right integrations in place is a good start for a successful drop shipping model, but it’s far from the only factor to consider. For more best practices, download our new tip sheet: E-Commerce Drop Shipping: Need to Know Basics for Brands and Retailers

Advancing in the Logistics and Drop Shipping Space

At ChannelAdvisor, we’re constantly looking to improve. Our comprehensive support for drop shipping allows retail orders to be quickly received, approved and sent through direct integrations with existing fulfillment processes. This week, we announced the acquisition of HubLogix, a leading fulfillment and logistics platform that automates order management by connecting online storefronts and marketplaces to distribution and fulfillment centers. As part of its platform’s fulfillment automation capabilities, HubLogix has developed a network of more than 150 fulfillment partners to allow sellers to work efficiently with their vendors and third-party logistics partners. With the acquisition of HubLogix, ChannelAdvisor strengthens its product suite with the addition of fulfillment automation, while also adding a talented team of distribution, fulfillment and supply chain domain experts to the organization. 

To learn more about our new integration and capabilities, be sure to join us for an in-depth webinar on Tuesday, June 20 hosted by Mark Vandegrift, VP of Product Management.