The State Of Drop Shipping Compliance

A survey of retailers and merchandise suppliers sheds light on compliance challenges, current drop ship initiatives, and what must be done to make drop ship work for all parties.

Introduction

E-commerce has been the most rapidly growing segment of retail for quite some time for both pure e-commerce retailers and brick-and-mortar retailers that have evolved to offer e-commerce. As e-commerce has grown, the retail industry has responded to the “right product, right place, right time” demands of consumers by offering more and better ways to get products into their hands, from “click and collect” to curbside pickup to same-day shipping.

One order fulfillment practice is drop shipping – the practice of having a supplier fulfill an order for the retailer without the retailer ever touching the merchandise. Items are packaged to appear as if they came from the retailer and then sent directly from the supplier’s warehouse or a third party to the consumer. Essentially, the supplier becomes the retailer’s fulfillment center.

Of course, drop shipping comes with different expectations, different retailer requirements, and different compliance priorities and challenges. In 2016, the Retail Value Chain Federation (RVCF) started hearing that drop ship was causing problems for both retailers and merchandise suppliers. We decided to conduct a survey of both retailers and suppliers to:

• Paint a picture of the state of drop ship compliance.
• Identify areas of alignment and disconnect between retailers and suppliers.
• Pinpoint causes of existing issues and opportunities for improvement.
• Find out how retailers and suppliers can overcome these challenges through collaboration.
• Determine where drop ship practices and initiatives are headed.

This white paper highlights the key findings of our drop ship survey and offers important takeaways for retailers and suppliers as drop shipping for order fulfillment, and related compliance requirements, become the norm.