Drop Shipping & Third-Party Logistics

If you are selling physical products you will need to warehouse, and eventually ship your products to your customers. Alternatively, you can have suppliers or manufacturers fulfil orders on your behalf (drop shipping) or utilize the services of a third party logistics provider (3PL).

Drop shipping

Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the supplier or manufacturer for fulfilment.

Neto makes drop shipping easy by supporting multiple drop ship suppliers per order, automatically splitting orders for multiple drop ship suppliers and delivering drop ship orders by email, FTP or a web service. Drop ship suppliers can also login to your Neto supplier portal to process orders on your behalf.

Benefits of Drop Shipping

  • Low setup costs
  • Low ongoing costs
  • Fast implementation

Negatives of Drop Shipping

  • Loss of control
  • Traditionally lower margins due to handling fees and inability to buy stock in bulk

3rd Party Logistics (3PL)

A third-party logistics provider (abbreviated 3PL, or sometimes TPL) is a company that provides a one stop shop service to its customers of outsourced (or “third party”) logistics services for part, or all of their supply chain management functions. This includes warehousing products, picking, packing and sending orders on the merchants’ behalf.

Neto integrates with a number of 3rd party logistics providers and also offers its own 3PL service through its partner, Cellnet Logistics (www.cellnetlogistics.com.au). This complete logistics service is ideal for businesses of any size and allows you to focus on selling, while we focus on delivering your products to your customers for the best possible price.

Benefits of Cellnet’s 3PL Service

  • Automated integration with your Neto back-end
  • Complete scalability
  • Economies of scale
  • Peace of mind
  • Reliable delivery
  • Simple cost structure
  • Flexible & customised solutions
  • Transparency
  • Specialised reporting
  • Best practice inventory control
  • Importing or sourcing assistance
  • Increased speed to market
  • Professional customer experience
  • Industry expertise

Do It Yourself (In house)

If you warehouse, pick, pack and dispatch orders in-house (your own warehouse), you will need to employ the services of a shipping carrier or multiple shipping carriers. Shipping carriers will deliver your products to your customers.

In Australia there are a number of shipping carriers and services available. The carrier(s) you choose will be determined by the products you sell, the urgency of your orders and location of your customers.

Express or Air carriers will typically deliver goods within 24 hours while standard road carriers will take anywhere from 2-14 days to deliver your products (depending on the location of the customer).

How Do Shipping Carriers Charge For Shipping?

Shipping costs are typically determined by 3 things:

  1. The size of the shipment
  2. The destination address
  3. The service used (e.g.: express or standard)

It is important to negotiate the best possible freight rates with your carriers. If possible, try to secure a flat rate for particular carton or satchel sizes. You will find that different carriers offer different rates for different delivery locations. It is therefore important to offer multiple carriers where possible. With Neto you can offer multiple carriers and multiple services to your customers, empowering the customer to make their own choice when it comes to how and when they receive their order.

How to Charge for Shipping

There is no doubting the fact that shipping costs are an important factor in any consumer’s purchase decision making process. Therefore, you should think carefully about how, and how much, to charge for shipping.

Below are some of the most popular ways to charge for shipping.

Free Shipping

Add the cost of shipping into your selling price - this is becoming a popular option, embraced by some of Australia’s largest online retailers. Consumers love free shipping.

Free Over “x” Amount

Charge a flat rate or tiered price for shipping up to a certain order value after which shipping is free. This method can increase average order value and drive up sales.

Cubic / Weight Based Shipping

Shipping costs are calculated on the cubic or weight of the order and the destination post code. The larger the order, the more expensive the shipping will be using this method. This is typically how freight carriers charge for shipping and is therefore the most accurate way for you to charge for shipping. There is less risk involved in this method.

Flat Rate Shipping

Charge a flat rate based on the order value.

Per Item Shipping

Charge a different flat rate per product. This allows you to set different rates for different items.

  • Last Modified: 19/08/2016 Neto Version: 6.3