Dropship Process
Dropship:
Dropship is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party(supplier) and ships directly to the customer. As a result, the merchant never sees or handles the product.
In Simple form, we can say Dropship is providing goods by direct delivery from the manufacturer to the customer.
The Benefits of drop shipping are:
- Drop ship suppliers take all the responsibility of handling and managing stock, saving you a heck of a lot of time.
- You don’t have to store stock on site,
- All packaging and postage is taken care of by the supplier.
- You only pay for the stock you sell, so you remove the risk of holding stock and being stuck with it if an item doesn’t sell.
Dropship Orders:
- When the customer places an order with your store, the system will automatically generate the purchase order with your supplier.
- The suppliers will directly ship the orders to the customers.
- Here, the store doesn’t need any inventory for the product.
Process Flow:
- Creating a Dropship Product.
- Associate Supplier for the Dropship Product.
- Creating a Sales Order for the Dropship product.
- Purchase Order is associated with the Sales Order.
- Complete the Purchase Order.
- Sales Order will be completed automatically.
- GL Posting for the Dropship Orders.
Creating a Dropship Product:
Login to the Application, Home page will be displayed.
Select “Content Management(CMS)” module from the home page.
Product search page will be displayed.
To create a new product, click on “Create New Product” button.
Create Product page will be displayed.
In Create Product page, enter the following details and click on “Save” button.
- Product Type: Select the type of the product from the given dropdown.
- Internal Name: Enter the Name of the Product.
- Fulfillment Method: Select the fulfillment method for the product from the given dropdown. Here, select the Fulfillment Method as “Drop-ship Only”.
- Require Inventory: Select “N”. For dropship product inventory is not required.
- Other required fields.
Once the Product is created, it will navigate to Update Product page.
Note:
- When the fulfillment method is selected as ‘Drop-ship Only’, the product will be created as dropship product.
- A Supplier must be associated for the dropship products.
- Inventory is not required for the dropship products.
Associate Supplier for the Dropship Product:
For a dropship product, a supplier must be associated. Such that, when the customer creates an order for the dropship product the system will automatically generate a purchase order for the supplier for the sales order created.
To associate supplier for the Dropship Product, select “Suppliers” from the left navigation in Update Product page.
In ‘Add Product Supplier’ page, enter the following details and click on “Create” button.
- Supplier: Select the Supplier from the given dropdown to associate with the product.
- Supplier Product Name: Enter the Supplier Product Name.
- Supplier Product Id: Enter the Supplier Product Id.
- Last Price: Enter the Supplier Product Price.
- Supplier can drop ship: Select “Y” from the given dropdown, such that supplier can dropship.
- Dropship fee: Enter the dropship fee if required.
- Other required fields.
Once the Product Supplier is created, it can be viewed in ‘Edit Supplier Product’ section.
Creating a Sales Order for the Dropship product:
When the Sales Order is created for the dropship product the system will automatically generate the Purchase Order and associate it with the Sales Order.
To create a Sales Order, select “Sales” module from home page.
Sales Home page will be displayed. Select “Create Order” from “Orders” tab. Create Order page will be displayed.
In create order page, select the “Store”, “Channel” and “Customer” details and click on “Update” button in ‘Order Settings’ section.
In ‘Create Order’ section, enter the following details and click on “Add to Order” button,
- Product ID: Select the dropship product from the given lookup.
- Quantity: Enter the number of quantities.
- Price: Enter the Price for the product.
The products added to create order can be viewed in ‘Order Items’ section.
Click on “Finalize Order” button.
The page will navigate to Select Shipping Address, method and Payment method page.
If the order is a dropship order, a message “Ship Group 1 (Drop – Shipped from ‘Supplier Name’) will be displayed in Select Shipping Address section.
Select Shipping Address, and Payment Method and click on “Review Order” button.
Note: Shipping Method is not required because it is a drop-ship order.
In Review Order page, select “Create Order” button.
The Sales Order will be created and it will navigate to ‘View Order’ page.
Purchase Order is associated with the Sales Order:
Once the Sales Order for the dropship product is created, the system will automatically generate the Purchase order for the Sales Order Created.
In View Order page, The Purchase Order ID generated for the order can be viewed in Order Items section.
To View the Purchase Order, Goto “Purchasing” module.
Purchasing home page will be displayed.
Select “Find Orders” from “Orders” tab.
In Find Orders page, search for the purchase order associated with the sales order created.
Click on the Purchase Order Id, it will navigate to View Purchase Order.
The Purchase Order will be approved and the Current Status changes to “Approved”.
Once the Purchase Order is approved. “Quick Drop Ship Order” button will be displayed in View Purchase Order page.
To complete the purchase order, click on “Quick Drop Ship Order” button.
The Purchase Order will be completed.
Sales Order will be completed automatically:
Once the Purchase Order is completed for the dropship order, the system will automatically complete the Sales Order created for that dropship order.
GL Posting for the Dropship Orders:
Once the Sales Order is completed. Sales Invoice will be generated.
To view the GL Postings for the Dropship Order, Goto “Financials” module.
Select “Reports” tab. In Reports page, select “Account Activities Details” link.
The Account Activities Details page will be displayed.
In Account Activities Details, enter the search criteria and click on “Generate Report” button.
The GL Account details for the sales order created will be displayed.
Gl Posting for Purchase order invoice:
When dropship PO is completed, the system will be generated PO vendor invoice.
Go to Find Vendor invoice, you can see vendor invoice for the respective PO as shown in fig.
You can see the Vendor invoice status will be In-Process.
When you make update status is Mark as Ready. The system will start posting in GL side as shown in fig.
Purchase Invoice
a. DR COGS
b. CR AP