What is drop-shipping and how can SAP Business One help you?

Blog updated on 27th May 2022 by Tye Howitt

The concept of drop-shipping has existed for quite a while now. However, it has only gained popularity in recent times. The drop-shipping fulfilment process has proved to be a good fit for companies that are looking to increase sales or trade in the e-commerce sector.

What is drop-shipping?

Drop-shipping is an order fulfilment strategy in which you do not have to keep the products you sell in inventory. Instead, when you sell a product, you purchase the item from a third party (manufacturer, wholesaler, etc.) and have it shipped directly to the customer. When used astutely, a drop-shipping strategy can reduce distribution and fulfilment costs and improve service levels significantly within the supply chain.

From a business point of view, drop-shipping has online retailers marketing products, while manufacturers and distributors fulfil orders, shipping directly to customers. The ultimate aim of retailers is to give consumers a variety of options to choose from without having the burden of stocking every item and every size and colour from a product line.

Where SAP Business One comes in

SAP Business One assists your drop-shipping capabilities by creating a 'drop-ship warehouse'. This is a virtual warehouse that does not contain physical stock. The moment the goods ‘enter' the drop-ship warehouse, you ship them to your customer. In addition to this, when a customer selects a product that has the dropship strategy as default, SAP Business One immediately opens a purchase order to order the goods from your preferred supplier. You can use drop-ship warehouses to manage serial and batch items as well.

Powerful automations in SAP Business One reduce the leg work that drop-shipping would usually require. Not only this, but also due to the integrated nature of SAP Business One, your process will become much slicker and more streamlined.

Automation is an important aspect of business operations that will only continue to grow as technology develops each year. Here are a few advantages that you can exploit by automating your drop-shipping process.

Inventory Management

Efficient management of product inventory is essential to run a profitable business.

Adding a drop-shipping strategy and automating your business processes enables you to synchronise inventory, keep your product listings up to date, and maintain far fewer physical products.

Order Management

For your drop shipping business to be successful, you should have a proven game plan to manage orders. Effective management of drop-shipping orders allows you to gain repeat orders and run a streamlined online store.

SAP Business One automations take care of challenging tasks like coding and data maintenance, helping you manage orders effectively, and ultimately saving you time and money - which is crucial for all businesses, especially start-ups and entrants to new markets.

Reduce costs and focus on value-add activities

By automating drop-shipping processes, you are doing two things:

  • Driving increased variety and volume of sales
  • Saving money, particularly by reducing the need to increase headcount

Managing drop-shipping without automations can take many hours of manpower, which either means hiring more staff or taking existing staff away from other value-add activities.

By automating and simplifying processes in your business, you can trust the technology to manage your sales and purchasing processes, while you resource on marketing and making as many valuable customer connections as possible to drive demand.

Become more Competitive with Other Drop-Shipping Companies

Automation is the growing trend alongside the rise of cloud technologies. Do not get left behind. Successful drop-shipping companies are already automating, so it is a smart choice to ride with the trend and automate.

Maximising the level of automation in your business is crucial, particularly when you are seeking to grow your business rapidly and improve your customer experience to out-manoeuvre the competition.


Humans make mistakes. Robots, less so. If you are copying and pasting information, or transferring customer addresses manually, you are likely to make mistakes that can sometimes be costly. Automating these tasks means that information can be shared automatically. For example, when a customer places an order, all of the information that they provided at checkout can automatically be sent to your supplier. You do not have to do anything.

Bottom line

Automated software for drop-shipping allows you to streamline your business in the most efficient way possible. It helps improve productivity, opens the door to growth and development, and it leads to better and bigger opportunities.


To compete in today's digital world, businesses must present all product variations to a customer and secure the business, with the competition lurking just one click away. Rather than stock every size, colour, flavour, design or product to give the customer the choice they demand, enable a drop shipping strategy to remove the burden.

Drop-shipping therefore reduces your investment in working capital and slashes the cost of inventory holding at a time when warehousing is expensive, and space is at a premium.

Working in close partnership with your suppliers, drop shipping allows you to give your customers all the choice they want, with a great customer experience, and the ability to fulfil orders quickly and efficiently with streamlined automations effortlessly looking after all the processes in the background.

Drop-shipping Caution

Whilst we talk about outsourcing order fulfilment to suppliers as a good thing, caution is needed. When a drop-shipping strategy is enabled, the business is giving control of the fulfilment process to the supplier. If the supplier delivers the wrong products or delivers late, it is your business name and relationship on the line, not your supplier's. You need to work with suppliers you can trust.

Why choose us?

If you aren't already convinced, the following customer comments are an indication of the service you should expect from LAKE.

"We were blown away. In fact, it's fair to say we chose LAKE, actually, much more than we chose a software product." (Holyrood Distillery)

"When LAKE came to pitch for the business, they just hit it bang on. They were very honest and very candid with us and you could tell they knew more about our sector. It was clear they had researched our business and invested in trying to understand what we do." (H Walton Ltd)

If you want to tap into the power of SAP Business One and a trusted SAP Business One partner, please download our SAP Business One Implementation Guide, start a chat or call us on 0113 273 7788.


by Tye Howitt

Blog Contributor.

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