Drop shipping is where the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to the wholesaler, who then ships the goods directly to the customer.
You may be acting as either the retailer , passing the order onto your supplier for shipping, or you maybe the drop-shipper , holding the stock, receiving the orders and shipping the items on behalf of a retailer. Use the guides below to learn how to deal with each scenario.
I drop-ship on behalf of another company
If you are the drop-shipper you will be receiving orders from a third party that you have to ship out to the customer. When you send out the goods you may want to produce a goods-out note using the third party logo and company details. At some point you will also need to invoice the third party since the customer will probably have made payment directly to them along with the order.
When you are sent the orders from the retailer, you need to enter them into Brightpearl. This can be done manually, on-by-one, or they can be imported using a spreadsheet. Since all the invoices will need to go to the retailer, so you can receive your money, you will need to set them up as a customer in Brightpearl and raise ALL the orders against them. To ensure the items are delivered to the customer you will need to make the delivery address on each sales order the actual customer's details.
A drop-ship order in Brightpearl will follow the usual fulfil, print, pick, pack and ship process. You can use your usual goods-out note template, but it's likely you'll want something specifically for this type of delivery. For example, you may be required to send the goods under the alias of the retailer; customer's can be unaware there was a middleman involved at all. You can design a template specifically for these shipments which can use different details including logo, company name, address and email. By using Channel Brands you can ensure the correct template is automatically used so you don't even need to think about it. If you set up a channel brand (along with a sales channel) you will need to make sure you select the sales channel on the drop-ship orders.
Invoicing the retailer...
You will need to invoice each individual order separately to ensure all the necessary accounting is created. This will update the retailers account balance that they owe you. The retailer will probably want to receive these invoices, which you can either print or email to them. You will also be able to send them a statement which will list all the outstanding invoices and overall balance that they owe.
I am the retailer and my supplier ships the orders
If you drop-ship you will be taking orders and payments from customers and then forwarding the delivery details on to your supplier so they can deliver it. At some point your supplier will invoice you for the cost of the items they have shipped.
There are two scenarios:
Scenario 1 - You do not stock the products at all, and always drop-ship
In this case your supplier may send you their daily inventory availability, via CSV, XML or FTP. You want to update all your sales channels (eBay, website etc) with this availability. You can import the product quantities into Brightpearl to update your inventory levels which will automatically update across your sales channels. However, altering inventory quantities in Brightpearl will create accounting entries to update your inventory asset value. Since you do not actually own the inventory you must ensure your products are set up with a zero cost value, so even though these accounting journals are created they have zero figures and no effect on your balance sheet.
Scenario 2 - You stock items and also drop-ship
In this case you will have stocked items with an asset value. When you purchase them you will use the supplier cost price, and this is what will be entered into the accounting when the items are received; updating your asset value. These items will increase your inventory levels and update across all your sales channels (eBay, website etc). It may be that your supplier also sends you an inventory feed every morning by CSV, XML or FTP. So the real availability of your products is actually a combination of your items in stock and the items your supplier has in stock. In this scenario you will need to create two separate warehouses to manage your product availability. You will need a warehouse into which you receive your stocked products, where they have a cost value, and you will need a warehouse for your supplier's product availability which has a zero cost value; since you don't own it. When you receive the inventory feed from your supplier each day, you will need to import the quantities to your "supplier warehouse" with a zero cost value. This is because each time inventory adjustments are made in Brightpearl accounting entries are made to increase or decrease your asset value accordingly. By using zero cost values, even though the accounting journals are created they have zero figures and no effect on your balance sheet.
The true availability of your products is then a combination of what you have in your own inventory and your suppliers availability. You can push the combined on hand quantity to your sales channels (for example Magento and eBay) by selecting BOTH the warehouses on the sales channel at Settings > Channels > List channels. You will also need to specify which warehouse inventory will be automatically allocated to orders from.
Orders are created in Brightpearl in the usual way, through the sales module. Items will be allocated from the warehouse selected on your channel. Once the inventory in that warehouse is all used up you will begin to see orders where no inventory is allocated. The warehouse can be easily switched on any order that needs to be shipped from your other warehouse or your "supplier warehouse" for orders which are to be drop-shipped. As items are allocated to orders your on hand inventory will reduce and the availability of your products will update across your sales channels.
For Drop shipping you will need to fulfil the order to a purchase order which you then send to your supplier so that they can ship the items to the customer. This is done using the partial/advanced fulfilment feature.
Once you have fulfilled the sales order a purchase order is created for you to send to your supplier, this tells them to ship the items but directly to the customer and not to your warehouse. Once they have sent the items they will usually let you know that they have done so and send you the invoice to be paid. The invoice will need to be received against the purchase order in Brightpearl in the usual way, this will create the accounting and update the supplier account balance but will also go back and update the original sales order shipping status so that you know the items were sent, therefore removing the order from the "items due to ship" list.
Partial fulfillment can be used for Drop shipping some or all items on the order. Lines that have been set to drop-ship (supplier to customer) will not ever affect your stock as it will never pass through your hands, going straight to the customer, therefore no accounting entries will be made.
When an order is fulfilled to be drop-shipped a purchase order is created (instead of a goods-out note used for shipping) which can be sent to your supplier, this instructs the supplier to ship the items, not to your warehouse but directly to the customer. Since there is no inventory to be received on the order the button is not available and there is no inventory status icon; the order is flagged as drop-ship instead. Once shipped the supplier will usually let you know they have sent the items and send you the invoice to pay. The invoice should be received against the purchase order as normal in order to update accounting and your supplier account balance.
At this point, you can choose whether the sales order will be marked as shipped once the purchase invoice has been received or whether they will be marked as shipped at another stage of the drop-ship process. This setting can be found in Settings > Purchases > Purchase settings:
If you select no, you will find an additional action against any drop-ship purchase orders to Mark as Shipped. Selecting to do so will mark the entire order as shipped, and automatically update the parent sales order rows as well. When marking as shipped, you can also enter a Tracking Reference and Shipping Method for your drop-ship orders.
You can also mark the parent sales orders as shipped in bulk from within the Purchases list.
You may wish to also update the order status of the purchase order to indicate that the items have been shipped to the customer.
If you choose to mark the drop-ship purchase orders as shipped, you will also have the option to enter a tracking reference and shipping method. These details will be added to the parent order as an order note.
Can I edit the drop-ship purchase order?
No, a drop-ship purchase order should not be changed. This is because the original sales order will not be updated with those changes. If you need to edit the order you should delete the purchase order then alter the original sales order before re-fulfilling it to a new purchase order.
Creating drop-ship purchase orders
Drop-ship purchase orders must be created from a sales order. The delivery address on a drop-ship purchase order is copied from the delivery address on the originating sale.
Drop shipping uses advanced fulfilment which must be activated in your account at Settings > Products/Inventory > Inventory settings.
Items on drop-ship purchase orders, even if they are stock tracked items, are assigned a 5xxx purchases nominal code since no items are received into stock. When a purchase invoice is received against a drop-ship purchase order, the net value of the items is added directly to the relevant 5xxx nominal code.
Drop-purchase orders can be split to back order. This is useful if your Vendor confirms they will only send some of the goods to your customer; with the rest to come later. You can split your goods off to a new drop-ship order; allowing you to mark the items your customers have been sent as fulfilled and shipped.
How to create drop-ship purchase orders
Drop-ship purchase orders are created by using the partial/advanced fulfilment feature. This must be activated Settings > Products/Inventory > Inventory settings.
- Search for and open the order.
- Hover over the Fulfil link at the top of the order.
- Select Partial/advanced fulfil.
- Confirm the quantity to drop-ship.
- Select the supplier next to each item.
Note: Items can be fulfilled to goods-out notes and shipped from your warehouse.
- Select "Ship to customer" in the Ship PO(s) to field.
- Click the Create Purchase Orders / Goods notes button.
- A separate PO is created for each supplier selected. The POs are listed at the bottom of the screen. Click the edit pencil next to a PO to open it and send it to your supplier.
Shipping drop-ship orders
Once your supplier has notified you that they have shipped the items to the customer, the inventory status of the order in Brightpearl can be updated to show this. Brightpearl offers the ability to mark drop-ship items as shipped in one or more shipments, and you can also choose to email the customer including a tracking reference. But if you don't want to use these features, they can be switched off and all the necessary steps of marking the orders complete can be automatically done for you.
Two shipping options for drop-ship orders:
- Manually mark drop-ship items as shipped directly against the drop-ship purchase order, input a tracking reference and choose whether to email the customer
- Automatically mark drop-ship orders as shipped, this will happen when the invoice is received against the drop-ship purchase order. The order will be marked as fully shipped and no updates are sent to the customer from Brightpearl.
Switch between these options at Settings > Purchases > Purchase settings.
How to manually mark a drop-ship order as shipped
- Search for and open the drop-ship purchase order. If you only know the sales order reference, you will find a link to the drop-shop purchase order on the order rows (there may be multiple) or in the order sales order notes.
- From within the drop-ship purchase order click the Mark as shipped button.
- In the pop-up window specify how many of the items have been shipped, enter a tracking reference and set the shipping method (defaults to order shipping method, which is set from the original sale).
- If you wish to email the customer, check the box. The email will be sent using the template assigned to the channel brand set for the order channel.
This will update the shipping status of both the drop-ship purchase order and the parent sales order. Order notes with the shipped date will be added to both the sale and the purchase.