Drop Shipment

Drop Shipment is a process where the customer places a purchase order on a company and this company instructs its supplier to directly ship the items to the customer.

Drop shipments are done because of the following reasons:

• Customer requires an item that is not normally stocked
• Customer requires a large quantity of the item which is not available with you
• It is more economical when the supplier ships directly to the customer

Types of drop shipment

If you see the real world scenarios this can be best categorize as mainly under three heads as:

• Type 1 : Full Drop Shipment

Where the seller sends the purchase order to the supplier for the full quantity that the customer had ordered

• Type 2 : Normal Shipments and Partial Drop Shipment

Under this scenario, If the seller has only part of the quantity available for shipping to the customer, then that quantity is shipped; a purchase order is created for the remaining quantity which the seller was not able to fulfill. This is typically true for single based item.

• Type 3 : Normal Shipments and Full Drop Shipment

In this scenario, the seller ships some goods from inventory to the customer, and the other goods are always shipped from an external source (supplier).