If you’re selling products as your home based business, perhaps you’ve considered using either a Fulfillment Service and/or a Drop Shipper to handle the products. Maybe you’ve wondered what the difference is? Some people confuse these two terms and in fact, sometimes they are used interchangeably. Although there is some overlap there’s a key difference between a Drop Ship Supplier and a Fulfillment Service.
The difference lies in inventory ownership. With a Drop Ship Supplier, the supplier owns the inventory and you just ‘buy as you go’; in other words, buy from the supplier as your customers buy from you. You can read more about how drop shipping is used in a home-based business in Jump Start your Home Business with Real Drop Shipping, Drop Ship Scams, and Leveraging Multiple Drop Ship Suppliers.
With a Fulfillment Service on the other hand, you must take ownership of the inventory. You must purchase the inventory in pallets, truckloads, etc. from a supplier and have it sent to the Fulfillment Center. The Fulfillment Service then acts as a stocking and shipping agent for you. This added risk also means you must take out insurance on the inventory.
You may wondering why use a Fulfillment Services with that kind of risk when you can just use a Drop Ship Supplier? Next week I’ll blog about when and why it would make sense to use a Fulfillment Service. Till then, have a great weekend!