What is the difference between outsourcing fulfilment and dropshipping?

What is the difference between outsourcing fulfilment and dropshipping?
Nowadays, more and more entrepreneurs are setting up their own web shop and selling their products via this channel. Two terms often come up in this context: fulfilment and dropshipping. Both are about shipping and storing products. Yet there are clear differences. We would like to explain the differences, so you can make the right choice for your shop!

What is fulfilment?

Fulfilment (often called e-fulfilment) mainly consists of handling and shipping orders. This involves the entire logistical process: from the storage of the products prior to sale, to picking, packing and shipping to the customer.

As a webshop, you can choose to outsource this fulfilment process to a fulfilment company. Often there are additional logistics services available. Some fulfilment companies can also take over the return processing or customer service. 

What is dropshipping?

Dropshipping means that you offer products as a webshop for a manufacturer or wholesaler. If a customer orders a product in your shop it will be ordered directly from the manufacturer or wholesaler and shipped through that party. The web shop then actually serves as a channel between the customer and the wholesaler or manufacturer. The entrepreneur does not have to worry about purchasing, keeping stock and shipping the products offered in the web shop.

The differences between outsourcing fulfilment and dropshipping

First of all, the similarities. With both outsourcing fulfilment and dropshipping, you as a webshop do not have to worry about the logistics process. 

The difference lies in who is responsible for carrying out the logistics process:

• With dropshipping, the responsibility for carrying out the logistics process lies with the manufacturer or wholesaler. In other words, you only act as a channel between the manufacturer or wholesaler and its customer.
• When you outsource your fulfilment, the fulfilment company is responsible for the execution of the logistics process.

Outsource fulfilment?

Curious about what our Fulfilment Solutions can do for your web shop? Feel free to contact Active Ants and we will be happy to advise you! 

Contact Us

Advantages dropshipping (and disadvantages)

As a web shop, choosing dropshipping has a number of advantages:

• You do not need storage space.
• You do not have to deal with issues such as:
  
  • The purchase of products;
  • Stock control;
  • Picking orders;
  • Shipping orders.

However, there are also disadvantages:

• You often have less freedom about the design and layout of your web shop. Manufacturers and wholesalers often want to have a say in where and how their products are offered. 
• You often have to deal with a smaller (profit) margin per product, because the manufacturer or wholesaler asks a fee for offering their products through dropshipping.
• You are dependent on the logistical services of the manufacturer or wholesaler. While this part is very important for the success of your webshop.
• You often have to deal with many different manufacturers and suppliers, each with their own rules and shipping options.

Advantages of outsourcing fulfilment

Choosing to outsource the fulfilment process to a fulfilment company also gives you advantages as a webshop.

Just like with dropshipping, you benefit from advantages when outsourcing the fulfilment process to a fulfilment company:

• You do not need storage space
• You do not have to deal with issues such as:
  • The purchase of products;
  • Stock management;
  • Picking orders;
  • Sending out orders.

But with the difference that you:

• More freedom about how you design and organize your webshop.
• More margin on the products you offer.
• Have more influence on the logistical process, because you can choose your own fulfilment partner.
• Only need one logistics partner. And that you are not dependent on manufacturers and suppliers for this.

Watch the video below and discover the benefits of outsourcing fulfilment with Active Ants!

Do you choose dropshipping or outsourcing fulfilment?

As a (starting) web shop, making large investments is risky or sometimes simply not possible. Investing in your own warehouse or personnel and machines is therefore often not an option. Fortunately, there are two ways to start a webshop or to expand your existing webshop, without having to worry about webshop logistics: outsourcing fulfilment or dropshipping

If you would like to test a product in advance, dropshipping is a good option. The disadvantage is that you will lose a large part of your profit margin. In addition, you have very little control over the purchasing and shipping process. And you have little freedom to determine things on your website. As a starting entrepreneur, this may not be so bad, but if you want to grow your business, these kinds of restrictions will hold you back.

Do you want to keep your freedom and have a higher profit margin? Then outsourcing e-fulfilment is a better choice. You will have to make a larger investment in the beginning to buy inventory or to produce it yourself, but you can achieve a higher profit margin. Moreover, you have more freedom to set up your website the way you want to. 

Outsourcing fulfilment to Active Ants

When you outsource your fulfilment to Active Ants, you are guaranteed extremely fast shipping. If your customers order a package before 23:59, they will receive it the very next day! In addition, we currently have over 500,000 storage bins available in our Autostores, spread across our 5 e-fulfilment centres in the UK, the Netherlands, Germany and Belgium, over which robots drive. This makes our fulfilment process error-free, fast, dust-free, theft-preventative and sustainable.

Curious about the fulfilment options for your web shop? Then don't hesitate to contact us or make an appointment and drop by!