Order Ops

Drop Shipping

Drop shipping is a fulfillment model where a seller takes an order but a supplier ships the goods directly to the end customer, so the seller never holds the inventory. In B2B distribution it appears as direct-ship, where a manufacturer ships on a distributor's behalf and the order data must flow between all three parties.

How drop shipping works in distribution

The buyer orders from the distributor; the distributor forwards the order to the manufacturer, who ships directly to the buyer and confirms with an advance ship notice. EDI ties the three parties together so the distributor stays in the loop on pricing, inventory, and shipment status.

Order data is the hard part

With three parties involved, the order, acknowledgment, ship notice, and invoice all have to route correctly. Manual handling between distributor and manufacturer is where drop-ship orders go wrong. Automated routing keeps every party in sync without re-keying.

Related Terms

Purchase Order (PO)

A purchase order (PO) is a buyer's official offer to purchase goods, listing items, quantities, prices, delivery dates, and ship-to location. It becomes a binding contract once the seller accepts it. In EDI it is the 850 transaction, the document that starts most B2B order flows.

Advance Ship Notice (ASN)

An Advance Ship Notice (ASN) is an electronic notification a supplier sends before a shipment arrives, detailing its contents, packing structure, and carrier. In EDI it is the 856 transaction. It tells the buyer exactly what is coming, how it is packed, and when, so receiving can be scanned and verified at the dock.

EDI (Electronic Data Interchange)

EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents like purchase orders and invoices in a standard electronic format. It replaces paper, fax, and email so two trading partners' systems can transact directly, without anyone re-keying the data.

Learn More

EDI 850 Purchase Order Guide Multi-Format Order Processing

Frequently Asked Questions

Drop shipping is a model where the seller takes the order but the supplier ships directly to the customer, so the seller never physically handles the inventory.

In B2B, the distributor forwards the buyer's order to the manufacturer, who ships directly to the buyer. EDI connects all three so order, ship notice, and invoice data stay aligned.

Sources: ASCM supply chain terminology

Automate every order format

OrderSync processes EDI, PDF, email, and fax orders into your ERP with AI extraction and validation. No VAN middleware.

Book My Intro Call Try Free EDI Inspector