Some merchants misunderstand that “dropshipping” is another phrase for “third-party fulfillment”. Both of them mean that fulfillment is outsourced to a third party, but the differences lie in the logistics services provided.
We already understand dropshipping and third-party fulfillment via the previous articles. Today, we are going to dig a bit deeper into the differences between these two things.
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1. Difference in the level of service
Dropshipping logistics providers (usually known as suppliers) handle order fulfillment for merchants, but not much else. They are not in charge of dealing with customers’ feedback. Thereby, merchants need to offer customers exceptional customer service, so they can handle any issues arising with the fulfillment process which impacts the customer experience.
A third party fulfillment provider specializes in packing and shipping. In addition, they often offer extra services such as managing product returns and handling customer service requests. Also, some third party fulfillment providers are willing to suggest shipping methods suitable for merchants’ business.
2. Difference in the shipping method
Both dropshipping logistics providers and third-party fulfillment providers handle the order fulfillment. Dropshipping logistics providers (usually known as suppliers) are responsible for product delivery. Merchants don’t own products until an order is placed by end customers and merchants have them process that order. Meanwhile, with a third-party fulfillment, the inventory merchants own is stored and shipped from a fulfillment center that is in the business of warehouse services and order fulfillment.
3. Difference in problems they solve
Dropshipping is an appropriate choice for a newbie or a small scale business. With this method, you can offer a wide range of products at low cost and low risk.
Meanwhile, third-party fulfillment is suitable for mature eCommerce companies, who want to save money from stocking and shipping infrastructure. If any merchants have outgrown their own capacity to process orders in-house, third-party fulfillment can help to extend their business operations.
