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What is Drop Shipping and how is EDI involved

What’s Drop Delivery and the way is EDI concerned?

Drop Shipping is a supply chain management (SCM) technique in which the retailer does not stock or take possession of the goods, but instead transfers customer orders and shipment details to either the manufacturer or wholesaler. It is the manufacturer or wholesaler who then ships the goods directly to the customer.

Some Drop Shipping retailers may have demo-items that are labeled as ‘not for resale’ in store, so that customers can inspect an item similar to those that they can purchase. Other retailers may provide only a catalogue or online listing of their products.

Drop Shipping reduces inventory, warehousing, packaging, labor and shipping costs for retailers by enabling them to pass orders and ship to information along to the manufacturer or wholesaler. EDI can help Drop Ship trading partners not only by providing integrated order, invoicing and shipping solutions, but by also providing the EDI 846 transaction set, otherwise known as the Inventory Inquiry / Advice (INVRPT in EDIFACT). The EDI 846 is used by manufacturers and wholesalers to notify retailers and trading partners of stock and inventory levels so that the retailer doesn’t commit to sales where not enough stock is available.

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