Drop Shipping

Drop Shipping is a fulfillment method where you sell products to your customers, but your supplier ships the goods directly to the customer. You never physically hold the inventory.

How Drop Shipping Works in YousrERP

1. A customer places a Sales Order with you.
2. You create a Purchase Order to your supplier for the same items.
3. In the Purchase Order, set the ship-to address to the Customer's address (not your warehouse).
4. The supplier delivers directly to your customer.
5. You invoice the customer (Sales Invoice).
6. The supplier invoices you (Purchase Invoice).

Setting Up Drop Shipping

1. In the Sales Order, check Drop Ship or note the items are for drop shipping.
2. When creating the Purchase Order:

- Select the supplier

- Set the Customer field to your end customer

- The delivery address becomes the customer's address

1. The Purchase Receipt can be created without affecting your warehouse inventory.

Drop Shipping Purchase Order Fields

• Drop Ship: Check this box to indicate drop shipping.
• Customer: The end customer who will receive the goods.
• Customer Address: Ship-to address (customer's location).
• Contact Person: Customer contact for delivery.

Accounting

• No inventory movement in your warehouse
• COGS is posted when the Purchase Invoice is created (or at Sales Invoice, depending on settings)
• Revenue is posted from the Sales Invoice

Benefits

• No warehouse or inventory holding costs
• Wider product range without stocking items
• Reduced handling and logistics
• Scalable for e-commerce businesses

Related Topics

• Sales Order
• Purchase Order
• Customer Provided Items