Make Drop-shipping Work

As Internet retailing was getting started in the mid '90s, online storeowners assumed drop-shipping would be the answer to their every worry. Little did they know it's an issue still being worked out today. Still, progress is being made in the technology, including standardization protocols and remote inventory-watch functions, and vendors can stand to gain from the distribution method if they know what to consider before signing up.

Filling orders through drop-shipping (sometimes called "virtual inventory") meant that site owners could route all their orders to wholesalers, who shipped directly to customers. For e-tailers, this eliminated the expense of carrying inventory - and the risk of being stuck with it if it didn't sell.

Online retailers assumed the days of needing a warehouse were coming to a close. And pity those poor brick-and-mortar stores who actually had to stock goods. They would probably be extinct by about 2005 or so.

But, there were service issues — in fact there were all kinds of issues with virtual inventory. Customers placed orders, retailers routed it to the wholesaler, but the product was never sent. Wholesalers shipped the wrong product or couldn't keep up with the pace of retailers' sales. The list goes on. More in other posts.