The Role of Drop Shipping in E-Commerce - A Case Study of a Swedish IT & Consumer Electronics E-Tailer

University essay from Göteborgs universitet/Graduate School

Abstract: In line with the technology development electronic retailers (e-tailers) are experiencingextensive pressure on delivering products and services more rapidly than before. In turn,substantial pressure is placed on providing efficient e-fulfilment, which is also considered to bethe most complex task of an e-tailer. To improve the order fulfilment efficiency, e-tailerscommonly transfer the order fulfilment to another actor. This may be performed by outsourcingthe warehouse to a third-party logistics provider (3PL) or by drop shipping, where thedistributor ships individual orders directly to customers. Albeit drop shipping’s recognitionamong e-tailers, there is no consensus whether drop shipping could be directly related tooutsourcing. The report undertakes a qualitative research approach with a case study at Dustin,a leading IT and consumer electronics e-tailer (CEE) in Sweden. The purpose of this study isto examine if a potential relationship exists among drop shipping and outsourcing. Thus,contribute to the research within outsourced order fulfilment strategies in the IT and consumerelectronics sector. The empirical results have been gathered through interviews andobservations at Dustin’s central warehouse. The findings indicate that drop shipping andoutsourcing have similar characteristics and are used to accomplish equivalent outcomes.However, it is uncertain to what extent drop shipping and outsourcing management areinterrelated. Due to the specific business characteristics of a CEE, drop shipping could bedifficult to apply as a sole order fulfilment method. Therefore, a dual strategy where dropshipping is used as an extension to the own warehouse could be ideal for a CEE.

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