Drop shipping

<< Prev Next >>

Drop shipping is an order fulfillment method in which a company does not stock the products ordered by customers. Instead, when a customer orders products, the company orders these products from a supplier. Then the products are shipped from the supplier directly the customer.

1C:Drive supports the following steps of the drop shipping process:

Set up the drop shipping process.
Create a sales order.
Generate a purchase order.
Generate a goods receipt.
Generate a goods issue.
Generate a supplier invoice.
Generate a sales invoice.
Track drop shipping orders.

Setting up drop shipping process

To set up the drop shipping process:

Sign in a user with Administrator access rights.
Go to Settings > Sales.
Under Drop shipping, select the Use drop shipping checkbox.

Creating sales order

To start a drop shipping sale:

Go to Sales.
Under Sales, click Sales orders.
Do either of the following:
- Create and fill in a sales order. To learn more, see Sales orders.
- Open an existing sales order.
Optional: If you want to ship a product partly from your stock and partly directly from the supplier's warehouse, split the product line in the sales order. To do this, select the product line, click, and enter the product quantity for the new line.
On the Products tab, in the Drop shipping column, select the checkboxes for the products to be shipped directly from the supplier's warehouse to the customer.
Note. You can select only products whose Product type is Inventory.
Optional: On the Delivery tab, specify the shipping details.
They will be displayed on the print forms and prefilled in a purchase order based on this sales order.
Click Post and close.

Then see Generating purchase order.

Note. If the sales order includes products not marked for drop shipping, consider the following options depending on the product type and business purpose:

Product type	Business purpose	Option
Inventory	Sell the inventory from stock	From the sales order, generate a sales invoice or goods issue. To learn more, see Shipping goods and processing sales invoices.
Inventory	Replenish the inventory to sell it from stock	Either of the following: To buy the inventory, from the sales order, generate Purchase order and process it. To learn more, see Procure-to-pay process. To produce the inventory in-house, from the sales order, generate Production order and process it. To learn more, see Make-to-order process or Multioperation make-to-order process.
Service or Work	Provide services or perform work in-house	Create and process a work order for the services or work. To learn more, see Service-to-cash process.

Generating purchase order

After you create a sales order with products marked for drop shipping, decide on a supplier and order the products. To do this:

Go to Sales.
Under Sales, click Sales orders.
Open the source sales order.
Set the Lifecycle status to In progress.
Click Generate > Purchase order: Drop shipping.
A purchase order is displayed. Its Operation is set to the Drop shipping. The fields are prefilled with the details from the sales order. The Products tab includes only the products marked for drop shipping.
Specify a supplier.
Click Post and close.

Then see Generating goods receipt.

Generating goods receipt

When the supplier fulfills the purchase order for the products to be drop shipped, generate a goods receipt. This will register the transfer of ownership from the supplier to your company. To do this:

Go to Purchases.
Under Purchases, click Purchase orders.
Open the source purchase order.
Set the Lifecycle status to In progress.
Click Generate > Goods receipt.
A goods receipt is displayed. Its Operation is set to Drop shipping. The fields are prefilled with the details from the purchase order.
Click Post and close.

Then see Generating goods issue.

Generating goods issue

When the order is shipped to the customer, generate a goods issue. This will register the transfer of the ownership from your company to the customer.

To generate a goods issue:

Do either of the following:
- Go to Sales and under Sales, click Sales orders. Then open the source sales order.
- Go to Purchases and under Purchases, click Goods receipts. Then open the goods receipt that registered the transfer of product ownership from the supplier to your company.
Depending on you choice on step 1, do either of the following:
- For the sales order, click Generate > Goods issue: Drop shipping.
- For the goods receipt, click Generate > Goods issue.
A goods issue is displayed. Its Operation is set to Drop shipping. The fields are prefilled from the chosen base document.
Optional: On the Delivery tab, enter the Tracking number provided by the supplier.
Click Post and close.

Consider the next step depending on your business process. The following table shows available options and the guidelines for them:

Option	Guidelines
First issue an invoice to the customer, then register invoice from the supplier.	First see Generating sales invoice, then see Generating supplier invoice.
First register an invoice from the supplier, then issue invoice to the customer.	First see Generating supplier invoice, then see Generating sales invoice.

Generating supplier invoice

When you receive an invoice from the supplier for the drop shipped products, generate the supplier invoice.

Note. If your business process requires to issue an invoice to a customer first, see Generating sales invoice. Then go back to this section.

To generate a supplier invoice:

Go to Purchases.
Do either of the following:
- Under Purchases, click Purchase orders and open the source purchase order.
- Under Purchases, click Goods receipts and open the goods receipt that registered the transfer of ownership from the supplier to your company.
Depending on you choice on step 2, do either of the following:
- For the purchase order, click Generate > Supplier invoice: Drop shipping.
- For the goods receipt, click Generate > Supplier invoice.
A supplier invoice is displayed. The Invoice type is set to Drop shipping. The supplier invoice is prefilled with the details from the chosen base document. On the Goods tab, the related goods receipt is prefilled for each product.
Click Post and close.

Generating sales invoice

When the order is shipped to the customer, generate a sales invoice.

Note. If your business process requires to register an invoice from a supplier first. See Generating supplier invoice, then go back to this section.

To generate a sales invoice:

Go to Sales.
Do either of the following:
- Under Sales, click Sales orders. Then open the source sales order.
- Under Sales, click Goods issues. Then open the goods issue that registered the transfer of the ownership from your company to the customer.
Click Generate > Sales invoice.
A sales invoice is displayed. The Invoice type is set to Invoice. The sales invoice fields are prefilled with the details from the base document. On the Products tab, the related goods issue is prefilled for each product.
Click Post and close.

Tracking drop shipping orders

To track fulfillment of drop shipping orders, view the following reports:

Report	Description	How to view
Sales orders by fulfillment method	Shows statuses of sales orders and the purchase orders related to them. The fulfillment method (such as Drop shipping) is shown for each sales order.	Go to Sales. Under Reports, click Sales orders by fulfillment method. Select the parameters, such as accounting period and sales order.
Purchase orders by fulfillment method	Shows statuses of purchase orders related to sales orders. The fulfillment method (such as Drop shipping) is shown for each purchase order.	Go to Purchases. Under Reports, click Purchase orders by fulfillment method. Select the parameters, such as accounting period and purchase order.

Drop shipping diagram

The following diagram illustrates the steps of the drop shipping process: