Drop Shipping

The system comes with support for drop shipping, which is the ability for suppliers to send items directly to your customers. The drop shipping support can affect how shipping costs are calcuated for customers during checkout, and how shipments are generated as a customer places an order. In addition, the system can be set up to send suppliers notifications when orders are placed for their items, and the notifications can be customized per supplier. For example, the notification could be designed in the form of a purchase order, telling the supplier to fulfill their portion of the order.

Topics covered in this document:

Overview of Drop Shipping Features

• Employees can create supplier records, and mark each supplier as a drop shipper with the "Is Drop Shipper" flag. In addition to the flag, each of the supplier's address fields must be populated, for the system to treat the supplier as a drop shipper.

• Employees can then associate each product in the system with the supplier that provides the product.

• Having drop shippers affects how shipping costs are calculated. The system will add up the shipping costs for each shipment in the order based on the items and the origin address of each supplier/drop shipper. The system will then present the total cost of all shipments to the customer during checkout, for each shipping method.

• As each order is placed, the system can automatically create shipment records under it. If a customer is placing an order with multiple products, and the products are provided by different drop shippers, more than one shipment would be created, because the items for the order will be coming from multiple points of origin.

• Drop shipping can also affect how taxes are calculated, if using the system's basic tax rates. Typically the system uses the basic tax rates associated with the customer's delivery address. Some states however are 'origin-based' for taxes. If both the customer's delivery address and a drop shipper's address are in the same origin-based state, the system will use the rates associated with the drop shipper's address.

• Each drop shipper can be set up to receive a notification when a customer places an order for their items, and the notifications can be customized per drop shipper.

Setting Up Drop Shippers and Products

To create a drop shipper in the system, create a supplier record and mark its "Is Drop Shipper" flag. At the same time, be sure to populate each of the supplier's address fields. If the address fields are not populated, the system will not treat the supplier as a drop shipper, even if the flag is set:

Note: Also populate the supplier's "Email" and "Order Notification" fields, if you wish to have the system send them a notification when customers place an order with their items. See below for more details on drop shipped notifications.

Next, associate one or more products with the supplier. Do this from the Products grid screen, or the product detail screen:

You can also view all of the products associated with a given supplier. To do this, use the three-dots menu next to the supplier, and select "Products":

Drop Shippers, Shipments, and Shipping Costs

Having drop shippers affects how shipping costs are calculated for customers during checkout. Typically, the system assumes there will be a single, outbound shipment with all the items in the order. However, if a customer places an order with multiple products that are provided by different drop shippers, the system will conclude that there are multiple shipments since the items are coming from multiple points of origin. The system will calculate shipping based on one shipment per drop shipper, plus another shipment for the leftovers - ie, all the order Items not associated with a drop shipper. The system will calculate shipping costs separately for each of these shipments and then add them up before presenting the total shipping cost to the customer. This affects both the "Estimated Shipping" feature on the cart page, and the shipping costs shown to the customer during checkout.

To help employees understand how the system divided up the order into shipments as each order was being placed, the system can automatically create shipment records under the order. To enable this function, turn on the "Create Shipments As Order Is Placed" setting on the Shipping Settings screen:

With that setting enabled, actual shipment records are created under the order as the order is placed. You can then view the shipments under the Shipments tab in the Customer Service form, or by clicking the "Shipments" option under the three-dots menu for the order:

Employees can also review all of the shipments associated with a given supplier across all orders. To do so, under the supplier's three-dots menu, select "Shipments":

Note: Even if the "Create Shipments As Order Is Placed" setting is turned off, the system will divide up the order during checkout internally, in order to compute shipping costs. Turning the setting on helps with tracking and visibility.

Drop Shipping and Taxes

Drop shipping can also affect how taxes are calculated. Typically the system uses the basic tax rates associated with the customer's delivery address. Some states, however, are 'origin-based' for taxes. If both the origin address and delivery address are in the same origin-based state, the system will use the rates corresponding to the origin address, not the customer's delivery address.

In most cases the origin address used is the store's address as defined on the Store Settings screen. However, if the order has drop shippers that are in the same origin-based state as the customer, the system will use the drop shipper's address to compute taxes.

(Note: if the state is also one in which shipping is taxable, the system always uses the customer's delivery address to compute taxes on the shipping cost.)

You can control the list of origin-based states and states where shipping is taxable, on the Tax Settings screen. Finally, you can choose to prevent tax from being charged on items from a particular drop shipper, by setting the "Charges Tax as Drop Shipper" flag for the supplier.

Drop Shipper Notifications

Employees can set up each drop shipper to receive a notification when a customer places an order for their items, and the notifications can be customized per drop shipper.

To enable this function, ensure that the drop shipper's "Email" field and "Order Notification" field are populated:

There are two supplier order notifications set up out-of-the-box:

• Both versions send the supplier an email listing the items in the order that they supply, and the quantities.

• The 'Enhanced' version additionally lists the "cost" of each item, and the subtotal of the supplier's items' costs. In this way, the notification can used as a "purchase order" telling the drop shipper to fulfill their portion of the order. The item costs are derived from the product "Unit Cost" field, which can be defined on the Products grid or details screen:

  

With these two fields defined, the system will automatically send each supplier with items in the order a notification as each order is placed. It is also possible to resend the drop shipper notifications for a given order. Under the notification tab in the Customer Service form, an Employee can check off which suppliers should be re-sent their notification, and send them.

Finally, employees can create their own custom notifications and templates and associate those with drop shippers. To create a new template, click the plus icon from the Templates grid screen. To create a notification based on the template, click the plus icon from the Notifications grid screen.