Reference: Dropshipping Glossary

You may have heard certain terms be used interchangeably while navigating the dropshipping world with your business. In this article we will share with you what terms we use in the Duoplane platform and how they may relate or replace terms you may have heard or use internally with your team.

 

Retailer

A retailer sells their products to the public and in this sense is typically B2C, but not always. A retailer will have a relationship with (potentially many) vendors which are sources of the variety of products they sell. In Duoplane, it is a retailer who will typically own the account which will link to their list of vendors for ease in sending purchase orders from the sales they generate in their ecommerce platform.

 

Dropshipping

Dropshipping, often conducted online with an ecommerce platform, is the sale of products by a retailer which are fulfilled directly to the customer from the vendor/supplier. The dropshipping model exists so inventory is held by the vendor/supplier and not the retailer which alleviates the need to order in advance and hold inventory, among other logistical and operational costs.

Dropshipping is the most popular model of Duoplane users, however there are many hybrid models that also work like a dropshipper who fulfills most products through their vendor and some others via 3PL or warehouse.

 

Vendor

Like a retailer, the vendor is a company selling things, however they are typically the party doing the fulfillment, and selling to the retailer who then sells to the end customer. Typically they function as a B2B seller and in Duoplane we define a vendor as the party doing the actual fulfillment, or shipment, of the item(s). A vendor may also sell B2C with their own store (e.g. Shopify) however they may be considered a vendor in Duoplane still if they are associated with a retailer for whom they fulfill purchase orders. 

Supplier

Like a vendor, a supplier will provide products to the retailer; they may also produce these products, or sell them B2C with their own business. In Duoplane if a retailer is sending POs to be fulfilled by their supplier, then they are acting as a vendor; the terms "vendor" and "supplier" are often used interchangeably because suppliers have the same role as vendors in this case—they fulfill purchase orders sent from the retailer.

 

Brand

The brand is the label of the product (e.g. Apple, Nike, etc.). In the great majority of cases this is not the same as the vendor/supplier, but it can be. As best practices, when working in Duoplane we recommend considering only the relationship with the vendor and retailer, and not the name of the brand of the products if it is not where the product is being ordered/delivered from. 

White-label brand

White-label branding is when the product produced by the supplier is rebranded to appear as if it was made by the retailer by modifying the label, name, packaging, design, etc.

Similar to regular brands, the workflow in Duoplane focuses on where the item is coming from rather than what it is called; we consider branding and white-label branding to be something managed more in the ecommerce platform. 

 

Ecommerce platform

An ecommerce platform is essentially the online store in which a retailer sells goods to their end customers. Ecommerce platforms supported by Duoplane include Shopify, BigCommerce, Amazon (FBA), and Magento.

Selling to customers from an ecommerce platform is very popular among dropship retailers because with an online business the products sold can be shipped from anywhere and inventory does not need to be stored. 

 

Purchase order

A purchase order is the order placed with a vendor by their retail partner in order to fulfill a sales order on the retailer's store. Because of the nature of dropshipping, purchase orders are often fulfilled by the vendor by shipping the items directly to the retailer's end customer who placed the sales order on their store.

The most commonly used feature in Duoplane is the automated creation and delivery of purchase orders to vendors. 

 

Sales order

A sales order is the order placed on the retailer's ecommerce platform by their end customer. Record of this transaction is sent from the retailer's store to Duoplane. 

 

Feed

A feed is a file or document that contains the status for each line item of a shipment or product. A retailer can use Duoplane to receive and read shipment feeds and inventory feeds from their vendors and have this information updated automatically in their store.

An example would be a shipment feed from a vendor that has information like tracking for 50 recent shipments—this file could be sent automatically to Duoplane which would then update the status of those orders in a retailer's store and update the customer with tracking. 

Similarly, a vendor's inventory feed sent to Duoplane will update the status and availability of products in the retailer's store. 

 

SKU

A SKU, also known as a "stock keeping unit", is a code created to identify and track product inventory. Products often have names designed to appeal to shoppers, but may be too lengthy or not specific enough in helping to identify the product to a supplier or vendor.  

Because vendors and retailers use a SKU to specify products in purchase orders and inventory feeds, it is considered best practice to have appropriate SKUs associated with each product so Duoplane can pass the information along to either party. 

Often times a retailer will have their own SKU for a product, which might differ from the one their vendor uses—Duoplane can easily track and associate products whether it is the retailer or vendor SKU being used. 

 

Warehouse

A warehouse is where inventory is stored for anyone selling products to end users. This could be a vendor or a retailer, however with dropshipping it is less common for a retailer to hold inventory themselves, so the need for a warehouse is reduced. In some cases a dropshipper will have their own brand to manage and require the need for a warehouse or 3PL to assist with storage and logistics. 

In Duoplane, a warehouse is often given the same relationship to the retailer as a vendor.

 

3PL

"3PL" stands for "third-party logistics". A 3PL company is a provider outside your organization that can manage multiple facets of fulfillment, such as storing and shipping products. A 3PL will have a similar relationship to the retailer in Duoplane as a vendor or supplier would, since it is the organization that is doing the actual fulfillment, however there may be different arrangements made with a 3PL in regards to payment for each shipment, since it is not a vendor receiving a purchase order for each sale.

 

Licensor

The party granting rights to its intellectual property for another entity to use. This format is followed by large brands with significant brand awareness. 

 

Licensee

The entity who has  obtained the rights to another party's intellectual property. The licensee typically owes royalties to the licensor for use of their IP.

 

 

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