Drop-shipping and inventory

There are three main scenarios in which you may drop-ship. Each one will tackle inventory management a little differently. The scenarios are as follows:

Scenario 1: You do not stock the products at all, and always drop-ship

This scenario may present in a couple of different ways, depending on how your vendor handles their own inventory management.

a) Vendor sends you an inventory feed

In this case your vendor may send you their daily inventory availability via CSV, XML or FTP.

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Updating inventory

You want to update all your sales channels with this availability, so you need to reflect that inventory in Brightpearl. You can do so by importing the product quantities into Brightpearl to update your inventory levels, which will then automatically update across your sales channels.

However, altering inventory quantities in Brightpearl would normally 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.

Allocating inventory

If you want to allocate inventory from the virtual warehouse (to ensure you don't sell more than is on your vendor's feed), in your sales channel settings, choose the virtual warehouse for your availability warehouse and allocation warehouse.

b) Vendor does not have inventory feeds, or inventory is unlimited

Create a virtual warehouse as above (ensuring product costs are zero), and set it to provide inventory availability to your channels. In this case, the actual quantities don't matter, as along as they're greater than one.

This time, set your allocation warehouse for your channels to be something other than the virtual warehouse, so that the figures in the virtual warehouse are never reduced.

Scenario 2: You hold inventory and drop-ship the same items, with an inventory feed

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In this case you will have stocked the items you hold with an asset value.

When you purchase them, you will use the vendor's cost price. 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 within Brightpearl and update them across all your sales channels.

It may be that your vendor 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 on hand items and the items your vendor has available.

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
  • a warehouse for your vendor's product availability, where the inventory has a zero cost value since it's not owned by you.

When you receive the inventory feed from your vendor each day, you will need to import the quantities to your "vendor 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 vendor's availability.

You can push the combined on hand quantity to your sales channels by selecting both warehouses as the 'availability' warehouses under your channel's settings.

You will also need to specify from which warehouse inventory is used for automatically allocating your orders. In this case you'll likely want to set your actual warehouse to be the allocation warehouse, so you can sell stock you hold first.

Scenario 3: You usually hold stock but sometimes drop-ship, but without a vendor feed

If you don't have a feed of inventory from your vendor but you want to continue selling when you have run out of stock, you will need to use settings in your sales channel platform to allow you to sell out of stock items.

The orders will download into Brightpearl as unallocated and you can fulfill to a drop-ship PO as normal.

Alternatively, you can still create a virtual warehouse with minimum quantities (similar to scenario 1), include this warehouse in your channel availability, but make sure you only allocate inventory from a real warehouse.

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