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1. What is dropshipping fulfillment?

Dropshipping fulfillment: The ultimate guide for 2024

As the digital market becomes increasingly competitive, ecommerce enterprises worldwide are seeking innovative, efficient solutions to meet customer demands promptly and stay ahead of the competition. One such innovative solution is dropshipping, a scalable and flexible fulfillment model that provides solutions to tackle many of these complexities. 

With dropshipping, you can sell products to customers worldwide without ever having to handle or store the merchandise yourself. As more businesses adopt dropshipping, understanding the model in detail can be a game-changer for new and aspiring online merchants seeking to tap into the model's potential.

In this article, we explore the dropshipping model, delving into its benefits and challenges to help you unlock your ecommerce business's full potential with dropshipping fulfillment.

Main takeaways from this article:

  • Dropshipping fulfillment allows businesses to sell products without maintaining an inventory, which significantly reduces upfront costs and risks.

  • The dropshipping order fulfillment process involves the customer placing an order, forwarding it to the supplier, order processing, production, quality check, packaging, shipping, and providing tracking information.

  • However, finding reliable suppliers and managing shipping can be challenging and requires research and planning.

  • Building strong supplier partnerships, implementing effective strategies, and monitoring business metrics are key to success.

  • Effective management strategies, like selecting reliable suppliers and investing in customer service, can make both domestic and international dropshipping a viable and profitable model for ecommerce businesses.

  • The types of dropshipping suppliers include manufacturers, wholesalers/distributors, retailers, dropshipping suppliers, dropshipping aggregators, print on demand (POD) suppliers, importers/exclusive distributors, and third-party logistics providers (3PLs). Each type has its own advantages and challenges, impacting startup costs, profit margins, scalability, and integration with ecommerce platforms.

  • When expanding internationally, choosing a reliable fulfillment partner with a strong network and efficient logistics is crucial for a seamless customer experience.

  • Print on demand is an attractive alternative to traditional dropshipping, allowing you to sell unique, customizable products globally without managing inventory.

What is dropshipping fulfillment?

Dropshipping fulfillment basics

Dropshipping fulfillment is a business method that allows online retailers to sell products without handling the inventory directly. Instead, when a customer places an order, the retailer transfers the order and delivery details to a supplier, who then ships the products directly to the customer. This eliminates the need for inventory storage, packaging, and shipping logistics, making dropshipping a hassle-free business model.

Types of dropshipping suppliers

Variety of supplier options

When it comes to dropshipping fulfillment, choosing the right supplier is a critical aspect of ensuring smooth operations and customer satisfaction. The following are the main types of suppliers in the dropshipping supply chain:


This is the most direct source for products, although not all manufacturers offer dropshipping services. When they do, you're likely to get the lowest prices because there are no middlemen.


Working directly with manufacturers offers the advantage of low initial investments as no inventory costs are involved. Based on your purchasing quantity, a manufacturer might offer you the lowest product cost, allowing for higher profit margins. As manufacturers are the source of the product, they can help you scale efficiently by meeting increased demand without significant supply chain delays.

From an integration standpoint, some manufacturers have established systems to integrate seamlessly with popular ecommerce platforms, making the process easier. 


There are also some downsides to working with manufacturers that shouldn't be overlooked. For instance, manufacturers usually require a minimum order quantity, which might be a hurdle for smaller businesses. Their systems' integration with ecommerce platforms could also be an issue, posing potential operational difficulties.

While a manufacturer's scalability is predominantly a benefit, it might introduce complexities as orders increase. Hence, a thorough review process is crucial to ensure they can manage growth without disrupting quality or delivery times.


These are middlemen who buy in bulk from manufacturers and sell them to retailers at a profit. They often offer dropshipping services to smaller online retailers.


One clear advantage of partnering with wholesalers/distributors as your dropshipping suppliers lies in the reduction of initial investment. With them, you don't have to be concerned about the manufacturing process; you just source ready-made products and use your capital for other crucial aspects like marketing and website optimization.

Wholesalers' vast product ranges offer an opportunity for wide scalability, and many already have established relationships with ecommerce platforms for smooth integration. If you're particularly lucky, you might find a distributor with exclusive access to in-demand items, giving you a unique market advantage. 


However, there's a flip side. Since wholesalers make a profit by marking up manufacturer prices, your potential margins could be significantly squeezed. The business of dropshipping also relies heavily on these suppliers maintaining high-quality standards and delivery efficiency, so a letdown in these areas could hurt your brand.

Another disadvantage of working with wholesalers/distributors is that you are at their mercy in terms of inventory; should they run out of your best sellers, it abruptly becomes your problem as well. While many wholesalers and distributors will have ecommerce integrations, not all platforms may be supported, and there could be a learning curve in setting up these technical integrations.


This includes brick-and-mortar stores or large online marketplaces that sell products directly to consumers. While typically not an ideal source for dropshipping due to marked-up prices, some online retailers offer dropshipping programs where they act as the supplier, allowing you to sell their products directly from your store.


When it comes to initial investment, cooperating with retailer suppliers can be quite cost-effective. Since these suppliers already have an established online presence and developed sales channels, they can offer dropshipping programs that eliminate the need for upfront payment for inventory. Plus, integration with ecommerce platforms might be easier, as these retailers often have pre-existing relationships with them, ensuring smooth operations and efficient listing of products. 


However, there can be potential pitfalls with this type of supplier. 

Firstly, the profit margins can be significantly narrower. Retailers typically sell products at a marked-up price, leaving less room for you to add your margin. Secondly, scalability could be a concern. As you grow your business, a retailer’s stock levels might not be ample enough to meet rising demand. This could potentially limit how much your dropshipping business can grow and might require you to diversify your suppliers to ensure steady product availability.

Dropshipping suppliers

These companies specifically cater to dropshipping businesses. They handle everything from product sourcing, warehousing, packaging to shipping.


Utilizing dropshipping suppliers carries an array of benefits for emerging businesses. Primarily, they require less initial investment by eliminating the need for a physical shop or warehouse, thus minimizing costs. Furthermore, their models effortlessly merge with different ecommerce platforms for a streamlined integration process.

Dropshipping suppliers can cater to scaling businesses due to their vast inventory and wide product range. Moreover, since they source goods directly from manufacturers or wholesalers, they can offer highly competitive pricing, thus setting potential margins high. 


One of the significant drawbacks is the rampant competition you'll face due to the ease of getting started with dropshipping suppliers. This saturated market could lead to price wars that drastically affect profit margins. Additionally, since a third party carries out fulfillment, there may be occasional lapses in quality control, potentially undermining your brand reputation.

While these suppliers integrate well with various ecommerce platforms, the more successful ones often have a high entry barrier. You might encounter subscription fees or high order minimums to commence business.

Dropshipping aggregators

These are services that have agreements with multiple manufacturers and wholesalers, offering a wide range of products from various suppliers under one platform.


Dropshipping aggregators can prove to be highly advantageous for ecommerce beginners due to low initial investment, as they bring together multiple suppliers on one platform. This feature also resolves the scalability issue by providing sellers with a vast range of products to pick and choose from, potentially leading to greater customer appeal.

Another major plus of working with dropshipping aggregators is the easy integration with ecommerce platforms, often facilitated by the aggregator’s own marketplace. 


However, partnering with dropshipping aggregators does bring its own set of challenges. The potential margins can be relatively low with this model, considering the aggregators' fees. These fees are charged for their service of aggregating multiple suppliers, essentially impacting your profit margins.

Additionally, while integration may be smooth, the risk of low-quality or counterfeit products can be higher. It's due to the immense and diverse supplier base, complicating the task of assuring consistently high product quality across the board.

Print on demand (POD) suppliers

These suppliers, like Gelato, customize white label products (like wall art, t-shirts, mugs, etc.) with your designs and ship them directly to customers on your behalf.


Print on demand (POD) suppliers stand out as the prime choice of dropshipping suppliers due to their unique offerings. With little to no initial investment, you gain access to a wide array of customizable products. This allows for the organic testing and development of your product range without the financial strain typically associated with inventory procurement.

Additionally, the adjustable cost structure of POD services potentially presents higher profit margins, especially on products that experience strong market demand. Scalability is a breeze as POD suppliers have the capacity to ramp up production in line with demand surges.

Let's not disregard the ease of integration, as most POD suppliers have sprung from the digital age, ensuring seamless integration with numerous ecommerce platforms.


However, a few considerations merit our attention. While working with POD suppliers presents higher profit margins, these are usually reliant on the success of individual products. More importantly, while opportunities for scalability are promising, it's critical to remember that they are greatly dependent on the supplier's capacity to cope with increasing demands.

Importers/exclusive distributors

Some companies have exclusive rights to bring certain products into their home country and distribute them. These exclusive distributors, often referred to as importers, maintain an advantageous position in the dropshipping ecosystem due to their unique access to desired products.


Partnering with importers or exclusive distributors for dropshipping can be a strategic choice. On the plus side, they offer unique products that can differentiate your store and often come with marketing support. If you hit on a popular product, scalability is high due to their ability to supply in bulk.


However, they may require a substantial initial investment, and the profit margins could be lower than other options due to their hold on distribution rights. Integration with your ecommerce platform may also need extra work or entail additional costs.

Third-party logistics providers (3PLs)

These third-party fulfillment centers offer fulfillment services for ecommerce businesses, including storage, packaging, and shipping, though they typically don't source the product.


In terms of advantages, 3PLs often require lower initial investment compared to traditional wholesaling and manufacturing suppliers. As they offer warehousing, packaging, and shipping services, you can eliminate significant overheads associated with managing an inventory.

Another significant advantage is the potential for higher profit margins. As 3PLs often provide bulk discounts, this can subsequently increase your profitability. Furthermore, the scalability of this supplier type is immense, as providers can typically handle an extensive range of products, adjust to varying order volumes swiftly, and integrate seamlessly with leading ecommerce platforms. 


However, it's essential to be aware of the potential downsides. Although utilizing 3PLs reduces initial investment, it might entail higher ongoing costs, as they charge for each service they provide, from storage to shipping, impacting overall margins. You may also have limited control over inventory, which could lead to stockouts or overstock situations.

Eight key benefits of dropshipping fulfillment

02_Eight key benefits of dropshipping fulfillment

As you embark on your dropshipping journey, understanding the benefits of dropshipping fulfillment is crucial. This model offers compelling advantages that can grow your ecommerce business and boost customer satisfaction.

Let's delve into the perks that make dropshipping fulfillment an attractive choice for online entrepreneurs.

1. Focus on marketing and customer acquisition

Dropshipping fulfillment liberates you from the operational logistics of managing inventory and shipping products, enabling you to allocate more resources to marketing and customer acquisition. 

You can spend more time understanding your customers, optimizing your website, and building impactful advertising campaigns to grow your audience. You don't need to worry about packing and shipping orders or managing stock levels, freeing you up to focus on expanding your brand reach and improving the customer experience.

2. Low startup costs

One of the significant benefits of dropshipping fulfillment is its low startup costs.

 Traditional retail businesses require significant capital investment for inventory purchase, warehouse space, and logistics management. In contrast, dropshipping eliminates these costs, as you don't need to buy products until they're sold, and the fulfillment partner handles the production and shipping. It's an ideal model for entrepreneurs who want to start a business with minimal initial investment.

3. Flexibility to test and adjust product offerings

Dropshipping fulfillment offers you the flexibility to experiment with different product offerings without financial risk. Since you're not purchasing inventory upfront, you can easily add or remove products from your online store based on their performance, market trends, and customer feedback. This agility allows you to adapt your business to evolving consumer preferences and stay ahead in the competitive ecommerce landscape.

4. Scalability

Dropshipping is inherently scalable. As your business grows, your dropshipping partner handles the increased order volume without you needing to adjust your operational infrastructure. 

Whether you're selling ten products a month or a thousand, your dropshipping partner can fulfill those orders efficiently. This scalability makes dropshipping an excellent choice for businesses aiming for rapid growth on a global scale without corresponding increases in operational complexity or costs.

5. Access to global markets

With dropshipping fulfillment, the world becomes your marketplace. You can sell products to customers around the globe without worrying about the complexities of international shipping and customs. 

A global fulfillment partner like Gelato has production facilities worldwide, ensuring efficient and reliable delivery to customers no matter where they are. This allows your business to expand to new markets, diversify your customer base, and increase revenue potential.

6. Freedom to operate your business from anywhere

Dropshipping gives you the freedom to operate your business from anywhere with an internet connection. 

Since you're not tied to managing physical inventory or a physical store, you can run your business whether you're at home, at a café, or traveling around the world. This flexibility is ideal for digital nomads and those seeking a work-life balance while running a successful online business.

7. Elimination of inventory challenges

Inventory management can be one of the most complex and resource-intensive aspects of running a retail business. However, with dropshipping, these challenges are eliminated. 

There's no need to purchase inventory upfront, manage warehousing, worry about overstock or stockouts, or arrange complicated logistics. Your dropshipping partner handles all these aspects, allowing you to focus on growing your business.

8. Efficient fulfillment and improved customer satisfaction

Efficient fulfillment is key to customer satisfaction in ecommerce. Dropshipping fulfillment ensures that your products are produced, packed, and shipped promptly once an order is placed. 

Furthermore, with a global fulfillment partner like Gelato, orders are fulfilled from the hub nearest to the customer, reducing shipping times significantly. This not only streamlines your operations but also leads to quicker deliveries, improving customer satisfaction and fostering customer loyalty.

Main dropshipping challenges

While dropshipping fulfillment holds vast potential for ecommerce businesses, it also comes with its fair share of challenges. These obstacles can impact your operations, customer experience, and overall business success if not appropriately addressed.

Here are the common hurdles that arise in dropshipping fulfillment.

1. Finding reliable suppliers for high-quality products

One of the primary challenges in dropshipping is finding reliable suppliers who provide high-quality products. 

Your brand reputation is on the line with every order, so working with suppliers who consistently deliver excellent quality is crucial. Poor product quality can lead to negative reviews and customer dissatisfaction, which can harm your business's reputation. Thorough research, vetting, and forming strong relationships with trusted suppliers are essential to mitigate this risk.

2. Managing customer expectations and timely shipping

In the age of Amazon Prime, customers have high expectations for fast shipping. 

Unfortunately, long shipping times are a common issue with dropshipping, especially when suppliers are located overseas. These extended delivery times can disappoint customers and harm your reputation. Working with a global dropshipping fulfillment partner like Gelato, which has production hubs worldwide, can help shorten delivery times and meet customer expectations.

3. Inventory management and avoiding stockouts

Although dropshipping eliminates the need for you to hold physical inventory, managing inventory still poses a challenge. 

You're reliant on your supplier's stock levels, and if they run out of a product, you risk disappointing customers with unfulfillable orders. Regular communication with your supplier and real-time inventory updates can help avoid these situations and ensure smooth operations.

4. Lack of control over fulfillment process and product inspection

With dropshipping, you have little control over the fulfillment process and product inspection. 

The product goes directly from the supplier to the customer, and you don't get a chance to inspect it for quality. This lack of control means you're trusting your supplier to maintain high standards consistently. Partnering with a reputable fulfillment partner can help ensure high-quality standards and consistency in the products delivered to your customers.

5. Building strong supplier relationships

A key benefit of dropshipping fulfillment is the opportunity to build strong relationships with suppliers. 

As you consistently work together, you can develop mutual trust, negotiate better pricing or terms, and potentially access exclusive products. A strong relationship with your supplier can lead to better product quality, quicker order fulfillment, and ultimately improved customer satisfaction.

6. Navigating shipping complexities and customs regulations

Dropshipping can significantly simplify shipping complexities and customs regulations, especially if you're selling internationally

Your fulfillment partner takes care of all the logistics involved, so you don't have to worry about shipping costs, delivery times, or understanding and complying with various countries' customs regulations. This benefit can save you significant time and stress, allowing you to focus on growing your business.

7. Adapting marketing strategies to different regions

Dropshipping globally allows you to learn about and adapt your marketing strategies to various regional markets. 

You can experiment with different approaches, products, and pricing strategies to see what works best in each location. This flexibility can give your business a significant competitive advantage in the global ecommerce marketplace.

8. Monitoring business metrics for improvement and growth

Dropshipping fulfillment allows you to easily monitor crucial business metrics such as sales, order fulfillment times, and customer satisfaction. These insights can help you identify areas for improvement, optimize your operations, and strategically plan for growth. 

For instance, if a product is consistently selling well, you might choose to focus more marketing efforts on it. Conversely, if customers are frequently dissatisfied with a product's quality or delivery time, you can address these issues with your supplier.

The step-by-step dropshipping order fulfillment process

Dropshipping order process

Understanding the dropshipping timeline and process is vital to managing your ecommerce operations effectively. From receiving customer orders to shipping the products, each step has its nuances that can impact the overall customer experience.

Let's demystify the dropshipping process and uncover key stages to ensure seamless order fulfillment.

1. Customer places an order

The dropshipping fulfillment process begins when a customer places an order on your ecommerce website. The customer selects the desired product and completes the purchase, providing all necessary shipping information. This entire process takes place on your online store, with the customer unaware that the order will be fulfilled by a third-party supplier.

2. Retailer forwards the order to supplier

Once the order is placed, you forward the order details to your dropshipping supplier. This process can be done manually or automatically if you use dropshipping software or a platform like Gelato, which integrates with your ecommerce store and automates the order-forwarding process.

3. Supplier processes the order

Upon receiving the order details, the supplier then processes the order. This involves preparing the necessary resources and production materials to fulfill the order.

4. Order production and quality check

The supplier produces the ordered product according to the specifications. Quality control checks are performed to ensure the final product meets the desired standards and is free from defects or errors.

5. Order packaging and shipping

Once the product passes the quality check, it is packaged securely and prepared for shipping. The supplier handles all aspects of shipping, including the printing of shipping labels and the dispatch of the package to the shipping carrier.

6. Providing tracking information to the customer

Finally, once the product is shipped, the tracking information is usually provided to you, the retailer, who then shares it with the customer. This allows the customer to monitor the progress of their delivery. In an automated setup, this process can also be automated, with tracking information directly sent to the customer as soon as it's available.

Vetting dropshipping services: What to consider

Focused on vetting services

Dropshipping companies are the backbone of your business. Building strong partnerships with reliable suppliers is crucial to ensure smooth operations and customer satisfaction.

However, finding the right fulfillment services can be a daunting task. With so many options available, it's vital to carefully consider several factors before making a decision, especially the following:

  • Product quality: Ensure the supplier provides high-quality products that meet your customers' expectations to maintain your brand's reputation.

  • Reliability: Check the supplier's track record for fulfilling orders correctly and on time. Missed or incorrect orders can harm your business.

  • Production capacity: Your supplier should be able to handle your business's demand, whether you're selling a handful or hundreds of items per day.

  • Shipping time: Consider the supplier's shipping times, especially if they're shipping internationally. Longer shipping times can lead to dissatisfied customers.

  • Location: Suppliers closer to your customer base can often provide faster shipping times. This presents a crucial advantage, particularly when selling internationally.

  • Customer service: Evaluate the quality of the supplier's customer service, as their ability to effectively communicate and solve problems can significantly impact your business efficiency and overall customer satisfaction.

  • Cost: Consider all costs involved, including the price of the products, shipping fees, and any additional fees the supplier might charge.

  • Integration with your ecommerce platform: Ideally, your supplier should be able to integrate with your ecommerce platform to automate the ordering process.

Research is your best friend when it comes to finding the right dropshipping suppliers. Take the time to thoroughly vet potential suppliers by reading customer reviews and testimonials.

Look for suppliers who have a positive reputation in the market and a track record of satisfying their customers. Don't be afraid to reach out and ask for samples or references before making a final decision.

Remember: The right supplier can make or break your dropshipping business. By choosing a reputable fulfillment service, you can ensure that your business runs smoothly and your customers remain satisfied.

Choosing the right partner for your ecommerce business

As you embark on your global dropshipping journey, selecting the right partner for fulfillment is crucial. A reliable partner will help you navigate the complexities of international shipping, customs, and returns, ensuring that your customers receive their orders promptly and hassle-free.

With the right strategies, partners, and a customer-centric approach, you have the potential to create a thriving and profitable online business that knows no geographical boundaries.

And there's no better partner to start this journey with than Gelato. With 130+ local production hubs across 32 countries, we ensure that your customers get their orders quickly, reduce shipping costs, and minimize environmental impact.

Plus, we integrate with major ecommerce platforms and offer direct API connection—whether you're selling on Shopify, Etsy, WooCommerce, BigCommerce, or your own website, we make it easy to link your store and sell to customers worldwide.

Elevate your dropshipping business and start selling globally with Gelato.

Dropshipping fulfillment FAQs

What is fulfillment in dropshipping?

Fulfillment in dropshipping refers to the process where a third-party supplier or manufacturer handles the production, packaging, and shipping of orders directly to the end customer on behalf of an online retailer. It eliminates the need for the retailer to physically store and manage the inventory, simplifying operations significantly.

What is the difference between dropshipping and fulfillment?

Dropshipping and fulfillment are both essential aspects of ecommerce, but they serve different purposes. Dropshipping is a retail model where the retailer doesn't hold inventory but instead transfers customer orders to a supplier or manufacturer who then ships the products directly to the customers. Fulfillment, on the other hand, refers to the whole process of receiving, processing, packaging, and delivering orders to customers. It can be part of a dropshipping operation or can be used in traditional ecommerce where the retailer holds their own inventory.

Is dropshipping fully legal?

Yes, dropshipping is a completely legal business model. However, like any other business, it's important to abide by all relevant laws and regulations, such as consumer rights and protection, tax obligations, and business licenses.

How do I fulfill a dropshipping order?

When a customer places an order in your online store, you forward the order details to your dropshipping supplier. Alternatively, certain platforms and software can automate order routing, automatically sending order details to the supplier. The dropshipping partner then produces the item, packages it, and ships it directly to the customer.

At Gelato, we simplify this process by integrating with your ecommerce platform, so when an order comes in, it's automatically fulfilled and shipped from the production hub closest to the customer, ensuring quick and efficient delivery.

Where do dropshippers get their stuff?

Dropshippers get their products from various suppliers, manufacturers, and wholesale distributors who offer a dropshipping model.

How do dropshippers ship their products?

Dropshippers don't personally ship their products. Instead, they partner with suppliers who handle the production and shipping. When a customer places an order, the dropshipper sends the order details to their supplier, who then fulfills and ships the product directly to the customer. At Gelato, we streamline this process further by automatically fulfilling and shipping orders from the production hub closest to the customer.

How long do drop products take to ship?

Shipping times in dropshipping can vary greatly depending on the supplier and the destination. With traditional dropshipping suppliers, it can take anywhere from a few days to several weeks.

However, at Gelato, we have a unique approach. With our 130+ production hubs across 32 countries, we produce and ship orders closer to customers worldwide, significantly reducing shipping times.

What is better than dropshipping?

Whether or not something is "better" than dropshipping largely depends on an individual's business goals, resources, and risk tolerance. However, one potential alternative is the print on demand model.

Like dropshipping, it requires no inventory, but it also allows you to create and sell a range of custom products.

Gelato offers a print on demand service with global reach, integrating with your online store and fulfilling orders automatically, offering a scalable, cost-effective solution with less logistical complexity than traditional dropshipping. Our production hubs all over the world allow us to fulfill orders closer to your customers, slashing shipping times and costs.


Next steps

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