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Direct Shipping ¿Retail Business to the Internet?

¿You sent for direct shipment, or keep it in the store?

Several Internet retailers are increasingly seeking to fill the orders as received, without necessarily having the relevant goods in his possession. The idea is that a retailer accepts an order, which is transmitted electronically to the manufacturer (or distributor, or wholesaler), who makes the shipment directly to customers. In general, the direct shipment made by the pack a ship the item, usually within one or two days (if the article is already produced and stored), and either the shipper or the retailer is responsible for shipping costs , depending on the arrangement between the two sides. In general, transport is the function that performs tasks for outward shipments of parts, components and products, including packaging, labeling, shipping and cargo weight.

The product is shipped with the waybill in the name of the retailer, sometimes in boxes bearing the logo or label merchant. The buyer must continue without understanding this and therefore returns are sent directly to the manufacturer or intermediary. The waybill is a document that lists in detail the contents of a package, carton, pallet or container especially for shipment to a customer. The details include a description of items, the number of the customer or the consignor, the amount sent and stock keeping unit (SKU) of items shipped.

The idea of direct shipment is not new. The APICS Dictionary defines it as the means of "taking the title of the product but not handle, store or deliver, for example, a supplier to send you directly to another or that a supplier sends the product directly to the buyer client. Certainly, the direct shipment has advantages such as allowing the dealer to have a diverse portfolio of products or a great mix of assets, inventory and storage costs reduced or eliminated. Also, because it requires no initial investment, even in the unlikely event of extreme or not sell anything, the dealer runs out of stock. In other words, there will be no dissatisfied customers and obsolete inventory and (potentially) expensive.

But reliance on direct shipping (sometimes referred to as "virtual inventory") is neither easy nor as profitable as it might seem at first instance. For one, although traders who depend entirely on the direct shipment do not put much capital at risk, can expect a lower profit margin, as several retailers have to buy the retail price suggested by the manufacturer. In other words, the profit margins on direct shipment of articles tend to be lower, because the merchants who buy the inventory in this way share a percentage of the sale with the manufacturer, usually from 8 to 10 per percent, in which case there is less room for movement to increase the retailer. Moreover, given the nature of the open market and level playing field (courtesy of the Internet, in part), there are a myriad of other sellers with exactly the same idea, because the Internet allows everyone to connect with the same list of suppliers and sell. Only Wal-Mart or Target or the like that have enough clout and volume, can expect to drive more sales and more margin.

PJ Jakovljevic - August 21, 2006
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