General Short Sale 3rd Party Authorization: Fill & Download for Free

Please be very aware of these issues before purchasing headphones from them:I too was very impressed by their site and their collection of headphones, most of which are not easily available in India.They do sell authentic earphones but most of the "rare" brands they sell either have no reliable warranty or offer very poor service within India and headphonezone completely washes their hands of any responsibility once they sell the product to you.It is near impossible to go chasing behind a company which only sells/manufactures in UK/China with only a 3rd party company to deal with service in India. These 3rd parties, most of the time have pathetic service with a single outlet in say Delhi/Mumbai. Headphonezone itself will not help you in any way other than giving you the contact of the 3rd party service center (who'll probably never reply to your complaint or ask you to mail the defective pair to Delhi at your own cost and either only :a) respond at a snail like pace after a couple of months orb) reject your warranty claim on some silly grounds.You will be much better off if you purchased from a local seller (who'll always honour their warranty) or from say Amazon (who'll help immediately if you are having issues with the manufacturers).Amazon for example replaced my 11 month old WD hard drive without asking me to foff and contact the manufacturer, I had a similar experience with Flipkart who replaced my 7 month old SanDisk pendrive.Also most of the reviews on their site are heavily filtered by their mods to not mention any of these issues. They featured my full name and picture on their site when I gave them a positive, glowing review but gave no option to edit it and even refused to publish a new review with my updated experience which I later tried to do.Even right now, they are using my name and face unauthorized to tout a lemon on their site.And after all this, they often aren't the cheapest option either as they claim on their site (explained later).I consider them to be extremely unethical and borderline fraudulent.******************************************************************************The following is my experience with them (long read):I purchased a pair of SoundMagic E10's (as a tester since I didn't want to go in splurging from an unknown site). I was impressed by its quality and posted a glowing review on their site, somehow they obtained my picture and featured it with my full name and picture without my permission.This in itself is a gross violation of my privacy."A.Slvrj said: Best for the price, poor durability.The headphones aren't bass heavy but have a excellent overall frequency response and have a very balanced, clean sound (ie. Treble and mids are not hissy/muddy/subdued in the favor of bass). Instruments and vocals sound amazing, if you are an audiophile and not a fan of bass bombers, you will not get better in-ear's. You could easily adjust for a better bass and treble with an EQ such as PowerAmp on your phone. With the comply tips on, they sound almost as good as the Bose Quiet Comfort 20 (which retails at Rs 18k).The microphone is decent, nothing to write home about and lack volume controls. There is a also special control which allows you to quickly switch between an iphone and android but the build quality of this switch is very poor and known to fail (resulting in busted sound).The ear tips provided are of very poor quality. They seem to be made of a very cheap material, uncomfortable and negatively affect the sound (the double flanged one was the best of the lot). It would be better if you could swap them out from another pair of headphones. Regarding the free comply tips, they are awesome, provide excellent sound isolation and improve the sound quality. However they are known to fall apart within a month and cost half as much as the headphones to replace.The overall build quality appears to be good with an all metal finish but there have been complaints in Amazon about the product failing in one ear after a couple of months. Unfortunately headphonezone's warranty return/exchange policies are severely lacking (they have no easy-exchange policy such as Amazon as of this review). God forbid something happens to it after you buy it."SoundMAGIC - E10SLater as predicted, the same headphone fell apart within 2 months of use. I contacted them immediately for a replacement and told them I really wanted a refund as the same problem might occur again.They refused and sent me this link http://www.acrotechindia.com/support.html. I filled up that form and those people didn't respond for a month.Again I contacted headphonezone and told them I was facing a nightmare experience with this message (combining different responses):Dear Headphonezone team,This is truly become a nightmare experience. I filled out the form at the acrotechindia link you sent me more than a month back, they still haven't contacted me for a warranty replacement. That's around 2k rs down the drain, I own over a dozen pair of headphones and none of them fell apart within 2 months, hell even the free ones which came along with my Galaxy S5 are still going strong for over 2 years..As a buyer I hold you liable for selling me such a poor product and not honoring its warranty. If I had bought the product from a local seller or Amazon I wouldn't be having this issue. Anyway, you have made me become very careful from buying stuff from new online retailers. I was looking to buy another pair of headphones ie Shure SE215's, but for sure I won't be buying it from you guys.Please send some courier to my place to pick it up, hell I'll even pay him for the return if you want but don't make me roam anywhere else for this. I don't want to spend more time, energy or money on that company or on this matter.I have lost all faith in that company, the same problem will occur in another 2 months as they are so poorly built and the cycle will repeat. I bought the headphones on January, now it is April, I got to use it only upto February, I'm tired of this, the best chance for your team to retain me as a customer is to take some responsibility for selling such a poorly built item to me.You can deal with them yourselves, either give me a full refund or give me store credit for the amount I paid so that I can get some Sennheiser in-ears this time (they have much better warranty service in India, 2 year warranty and sturdy headphones). The A-B connector in the E10s is a known weakpoint as evidenced by the several complaints by the long term users online and still the company has done nothing to acknowledge this. I don't want another pair as this will surely happen again.Please take more steps to ensure after sales service to retain loyal customers, your duty to the customer doesn't finish as soon as you sell it.Thank you,Their response was that they needed a response from SoundMagic to take further action."I understand the hassle you are facing, but trust me we cannot do it from our side unless they authorize us to do the same. Because without their authorization we cannot replace your product as well.We need a heads up from them and then we are really happy to help you, but until that we cannot do anything.Hence here is the contact information of the person and you can get in touch with them directly-(They gave me the contact of SoundMagic's 3rd party service company).Thank you,For which I responded with (combining different responses):Hello again,What I am saying is I don't want a replacement from them since the problem will definitely happen again. You can collect the broken ones from me and deal with them yourself, they have very poor response anyway, its already April, I have been having this issue since .March 02. I'll even provide you with pictures etc if you need.I want either a refund or store credit so that I can look into purchasing a different, more reliable brand with better service such as Sennheisers. I don't see why you need their authorization for giving me refund/store credit since I bought the product only from the headphonezone site, not them.Likewise I bought it from you guys after being impressed by your site and collection and put my faith in your team, not them. This seems like shifting the blame like we see so often in a government offices.Your employers sold me a lemon, I didn't buy it from the people who you keep asking me to contact They never responded anyway.Thanks for teaching me a 2000 rupee lesson.Thanks,Again they refused to do anything "without any authorization from SoundMagic", which is just a rule they made up to offload responsibility to the manufacturer. This was after about half a dozen back and forth emails between me and them.After all this, both the companies lost a customer over a mere Rs 2000, this seems to be a big problem with companies in India, 0 customer service that is, why can't they realize that they can keep loyal repeat customers for life if they just provided decent customer service and not look for short term "benefits".Also they aren't the cheapest option as they claim on their site:If you've found a better price for this particular product, let us know!I was looking to buy a pair of Shure Se215's and did exactly that when I found it for Rs 6,499 at Snapdeal vs Rs 6,999 at their site, Other companies usually offer incentives such as discounts or even offer the product free if you found something like that, I did exactly that to see what headphonezone would do.Their response:Shure products are in general very volatile in terms of pricing. You'll find it to be least volatile on our website. We usually offer the best possible pricing for Shure products.My reply:Customers don't care whether it is volatile or not, customers usually go for the cheapest option and yours isn't.It hasn't been for the past 2 weeks when you bumped its price from Rs 6500 to Rs 6999 recently, so it is not "stable" on your site either.Anyway it is none of my concern, I just wanted to give you a heads up.Their response was they didn't care and wouldn't budge:Fair point sir. But the price that is displayed would be the final one. Let me know if I could help you in any way with regards to place the order.Some online headphone retailers abroad such as mp4nation and many others (mp4nation ships to India for free in 10-30 days), offer one "no questions asked" replacement per order if any defect occurs. Their only requirement is that you chop up your existing pair of headphones into pieces and smash the audio drivers, following that if you send a picture of the destroyed pair to them they immediately issue a replacement. This is to avoid people abusing their service.But that is some awesome customer service which is bound to win loyal customers, I've just ordered a pair from them. I would be gladly willing to wait the extra number of days to purchase from them.The situation is not unlike that autowallah/taxi driver who asks an extra Rs 50 etc at the end of the trip, you might argue, you might even end up paying him. He might gain Rs 50 right then, but you will surely end up never calling him again and even be willing to wait for Uber/Ola next time even when there are dozens of autos/taxis around. And they end up lamenting that Uber/Ola took away their business, Uber/Ola didn't, shoddy customer relations among the people in your business sealed the deal for consumers.A similar situation exists for online retailers, either offer good after sales support and genuine care for your customers or end up drying on the vine to bigwigs like Amazon/Flipkart who were willing to take a loss to cement their relationship with their consumers.UPDATE:SoundMagic just contacted me with this message in reply to when I asked them if headphonezone needed an authorization from them to resolve this issue and give me a refund/store credit:I can only authorised to give the new headset or the other model of SoundMAGIC products.I mailed them again and they have said that:I cannot replace the product.................I am clearly saying we wont be able to do anything about it.Despite saying something entirely different earlier (I had quoted that reply of their above in bold italics).So, again it was only headphonezone at fault for wasting my time and sending me on a pointless go around.Update 2:After posting this onto reddit, r/India:https://www.reddit.com/r/india/comments/4eaw59/please_be_aware_of_these_issues_before_buying/The founder Mr Raghav from HPZ has intervened and promised to put an end to this matter.

Amanda CothrumYou’re one of my best biggest lovers here on Quora.This how it works if you request your own credit report and how the version differ from the landlord requests it.In the field off my studies as an credit expert, we all try to work out our best for the customers.You’ve found the perfect place to rent, and now the property manager tells you all you need to do is fill out an application, so she can run a credit check—gulp.Whether you’ve got great credit, bad credit, or no credit, credit checks probably make you a little uneasy. What if there’s a problem?To help you feel more at ease, I’m going to answer some common questions about landlord credit checks, preparing yourself for one, and your options if your credit isn’t stellar.Can a Landlord Really Check My CreditYes, landlords and property managers can legally screen you as a potential renter, and the screening process often involves a credit check. However, you must give your permission in writing. Your signature on the rental application may count as written permission, or you may be asked to sign a separate credit screening document.Property owners generally check credit using services offered by landlord associations, tenant screeners, and major credit bureaus or by asking you for a physical copy of a report. Be prepared to give the landlord the following information if they intend to order the report:Full nameAddressSocial Security numberDate of birthLandlord Associations will supply tenant credit checks to the landlords for a fee. Depending on the association, the credit check may show up on your credit report as a hard inquiry which may cause a slightly negative drop in your credit score.Tenant Screening Services may also provide credit reports to landlords. However, some of these organizations may not. Some reports the landlord can request may also include any prior evictions, bankruptcies, or judgments, and any other background information they require prior to offering tenancy.Credit Bureaus also provide the landlords with the credit reports, however, these services that are offered by Experian, TransUnion, and Equifax are usually shown as a soft inquiry on your credit report, and they require you to initiate the credit check yourself.What’s Included in a Rental Credit CheckWhat landlords check in a rental screening varies. Some may check only your credit score. Others may require more information. These “tenant screening reports,” as they’re often called, frequently include various reports and details:Standard credit reportsCredit scores or credit ratingsCriminal and sex offender background checksResidence and eviction historiesEmployment verification and historiesSome landlords may also check your public bank and legal records and even dig into your social media profiles to uncover anything they’d consider unacceptable.“People don’t realize there is a full tenant screening. It’s beyond (a standard credit report) in most cases, particularly in the case of a large rental company,” says Rod Griffin, director of public education for Experian.The format of these reports depends on the company supplying them, but in terms of credit information, a report should generally contain the same credit details you would see if you ordered your own credit report.Here’s what landlords usually see in standard credit checks:Loans (current and past)Bankruptcies, foreclosures, and short salesMinimum payment amounts for debt accountsLate payment historiesCredit historiesCredit scoresWho Pays for a Landlord Credit CheckWith a rental application, you’ll most likely pay for the credit check. The check is usually included in the application fee. Concerned about paying that fee when you’re not sure you’ll be approved? You may not have a choice, but if you do, consider the DIY credit check strategies below.What if There’s a Problem with My Credit ReportMany landlords consider credit one of the most important parts of making a leasing decision. What credit score is needed to rent a house can differ from landlord to landlord, but you can expect the minimum to be somewhere between 600 and 620.Certain items may be deal breakers for property owners, however. These could include the following:Car repossessionsCredit card charge-offsAccounts currently in collectionsOther things that matter to most landlords besides credit include income, criminal history, and eviction history.If a landlord uses information from a consumer report to take “adverse action” against you, they must give you the reason in writing and include information about how to order your own free credit report.In other words, if your report contains something negative that the landlord uses to make their decision, you’re entitled to know what this is, and you can request a free copy of your report.Adverse action can result in a denial of your application, but it can also include a requirement for a cosigner, a request for a larger deposit, or an increase of the monthly rent offer, according to(FCT) the Federal Trade commission.What can you do to ensure there are no surprises? Check your own credit in advance and tell the landlord about any potential problems that could be an issue.How Do you Check your Own CreditWill you be renting a home or apartment in the not-too-distant future? Prepare yourself by getting your credit report in advance. An easy way is to find credit expert or sign up for a free credit score from credit .comThe score a landlord receives may be a slightly different number, but all credit scoring models generally take into account the same five factors:Payment historyDebt amountAccount mixCredit history ageNew credit accountsWith your own credit report in hand, ask the property manager or landlord to review the report and see whether it’s worth it for you to apply. You can also ask them if they’ll let you use a service like Experian Connect to purchase a credit report that you can share with people you authorize. Equifax offers a similar service called Identity Report, and TransUnion’s service is called SmartMove.The landlord may still want a full tenant screening, but if you can provide your own credit report up-front, they can tell you whether you have a chance before you agree to lengthier—and possibly pricier—processing.Can I Rent if I Have Bad CreditIf you have bad credit, you might be wondering whether you can rent at all—but don’t worry!“Just because you have bad credit doesn’t mean you aren’t going to pay your rent on time,” says Jeff softley , Director president of Experian , a company that helps renters build their credit by paying through an online portal.Landlords know that renters usually don’t have perfect credit. Often the biggest concern is whether you pay your rent on time. Historically, information about rent hasn’t been included in standard credit reports and confirming on-time rent payments can be a tedious process of contacting former landlords.But recently, some rental payment history has started to appear on some credit reports, and companies like RentTrack can help people build credit through on-time, trackable payments.“Experian was the first company to include positive rent information in credit reports,” Griffin explains. Experian gathers this information from three companies: ClearNow, WilliamPaid, and RentTrack.When tenants Pay rent using one of these online platforms, the payments get reported to Experian—and TransUnion also reports rental payments when available. However, note that you or your landlord have to sign up for one of these services for your rent payments to be included in your credit file.It’s also important to note that if you’ve had unpaid rental payments that were eventually turned over to a collection agency, the collection account will show up on your credit report. Accounts in collection can severely lower your credit score, making it more difficult to rent another place in the future.So be prepared to explain your situation if necessary and take steps to pay off those accounts to show that you’re committed to meeting financial responsibilities.Can I Rent with No Credit HistoryIf you’re a student, a recent immigrant, or newly divorced, you may have a particularly hard time renting for the first time, especially if you haven’t established your own credit history.But if you can find a place, consider paying rent through a rental payment reporting company like RentTrack to build your credit. In the meantime, a landlord may rent to you—even if you have no credit—if you can find a consigner with good credit. To increase your chances of approval, you could also offer to pay the first and last months’ rent or a higher security deposit.If none of those options work, consider looking for a cheaper place to rent where the landlord may have less strict credit requirements.Once you’re in, start building your credit. Pay down balances on your credit cards, make all payments on time, pay more than the minimum payments, and avoid carrying large balances on your accounts.How to Pass A Rental Credit CheckIf you feel that there is even the slightest chance you may not pass a rental credit check, there are a few things a potential tenant can do that will hopefully improve your chances.Find someone to co-sign for you so the landlord has a guarantee that they will get the rent payment, even if you were to default.Be completely honest and up front with the landlord about your finances and show them the progress you have made regarding paying your debt and rebuilding your credit.Offer to pay the rent in advance or offer more for the security deposit to show good faith and your intent to pay what you oweMake sure to show the landlord solid proof of your monthly income or offer to allow them to take the rent via direct depositPay a bit more for monthly rent as a compromise. However, this would probably want to be very last on your list of things to doLandlords are always looking for that perfect tenant, so they have little to worry about especially when it comes to their rent being paid on time. Either as a potential tenant or a landlord, you should educate yourself and always be aware of different scams that may be going around. Federal Fair Housing Guidelines, as well as the standards of tenant screening, should always be followed and adhered to, and if there are any red flags, you should dig a little deeper for more information.Watch to Watch for as a TenantIt is best to find a landlord that is not long distance because this can certainly be a red flag for any tenant. If the landlord is not in the area, then typically they will use some kind of management company or other type of property managers to help oversee the properties. If this is not the case, you may want to be wary of a scam the landlord might be pulling on his tenants.Never go by an oral lease. Always have your lease in writing and retain the signed copy for your own records as well. If the landlord is not willing to offer you a written lease, then this should be a red flag and may mean they will try to scam you out of money.Bottom line: Finally, if the landlord doesn’t have a tenant screening process in place as discussed above and does not utilize tenant screening services at all, then you may find that the landlord isn’t as high quality as you would expect. It may mean that they don’t care as much about the property or they may be running some kind of scam.Just like a landlord is always on the search for the quality prospective tenant by running tenant screening reports and checking credit reports; the tenant should also do their research on the type of landlord they are going to have as well.Thanks.

This answer has been completely re-writtenOver the past several years, drop shipping has emerged as the ‘go to’ strategy for most e-commerce retailers. This method has become the de facto standard for most of the uber-successful e-commerce startups from the last several years including:Everyone here at Brightpearl talks with customers and new prospects dozens of times per week about drop shipping, but we definitely found that there really wasn’t a great overview of the process to give growing retailers a detailed analysis of this process as part of a lower-risk vertical expansion strategy.For a how-to guide on shipping & fulfillment, please check out: Matthew Carroll's answer to How do e-commerce startups, like One Kings Lane, Manpacks, and Dollar Shave Club handle the inventory fulfillment side, without a lot of initial investment? Are there drop-ship suppliers they work with, or manufactures outside of the US?What is drop shipping?Let’s start out by getting a good general definition of drop shipping to make sure that we are all on the same page:Drop shipping is an inventory management technique that enables a retailer to sell a product for which the retailer is not currently holding in inventory. The retailer is able to do this because they have have setup a drop ship arrangement that allows the retailer from the product manufacturer's inventory of Available To Sell* products.There are three primary drivers for employing this methodology are:Positive Cash Flow: Once the drop shipping agreement has been arranged, the retailer is in a prime spot - they have product to sell, but they are not financially obligated to purchase any of it. When a customer places an order, the retailer receives the cash for the transaction and then enters into a financially binding relationship with the brand / manufacturer / supplier for transferring ownership rights of the product.Reduces Inventory Risk: We all remember how scary and painful the Great Recession was and it actually becomes one of the most significant driving forces to widespread adoption of this technique. Drop shipping provides the cash flow flexibility to the retailer (only paying for what you sell) without the shackles of inventory from pre-packs or case-packs (pre-defined assortments that most of the time sticks the retailer with odd sizes or odd colors). Additionally, the manufacturer retains ownership of the product, so it reduces much of the apprehension and risk from consigning goods.Reduces Transportation Expenses: The theory of drop shipping is brilliant because it cuts out the retailer’s Inbound Shipping (the amortized cost for the shipment from the brand’s / manufacturer’s store to the retail shop) - this figure is about 2.75% to 4.25% of Retail Price ( for a $100 Retail Price item).[* Available to Sell is a report of the available inventory from the brand / manufacturer that is currently not allocated to orders (i.e. Qty. of Medium Green T-Shirts - Sum of all future orders with a Medium Green Shirt Currently remaining to be sold = Medium Green T-Shirts Available to Sell. Basically, the report tells the retailer how many units are able to purchased by the retailer - not necessarily how many are on hand at the warehouse. This is an important difference because, as you’ll see, sometimes drop shipping can get a little messy - so that distinction could potentially be of use to grease the wheels to make your customer happy ]Three primary implementations of drop shopping?For purposes of explaining the different the different drop shipping models, we are going to define just a couple of terms to make sure that we are all on the same page:Customer - the person who has engaged in the transaction with the retailerFashionSite.com - the retailer who is selling the product that the customer has purchasedBrandXYZ - the brand / manufacturer / supplier of the product to our retailer, FashionSite.comThis process is designed to feel completely painless with the customer never knowing that FashionSite.com never took physical ownership of the goods. This process is designed to be efficient and reduce the considerable transportation costs and inventory risks associated with FashionSite.com holding the inventory while enabling the brand, BrandXYZ, to sell more product in more venues.This process generally takes anywhere from 4 - 12 business days:Until a brand reaches about $20m in top-line revenue, it does not make financial sense to own your own warehouse and manage the shipping and fulfillment process yourself - we are all over-worked and over-stressed, handing the actual order fulfillment is something that we simply do not have time for nor physical ability to do (well... some of you do and my hats are off to your supermen … or superwomen - we are gender inclusive here at Brightpearl). This is all by way of saying that the majority of brands / manufacturers will be working with a 3PL (third-party logistics) or outsourced warehousing & fulfillment company (i.e. a vendor that warehouses the inventory and whose sole job it is to manage inventory and ship orders that are submitted).Hence, the two numbers that are probably making you raise an eyebrow are:BrandXYZ Warehouse Fulfills Order: After working with five different 3PLs or outsourced warehouses over the years, pretty much every contract that I have read and signed stipulates that the warehouse has a one (1) to three (3) day ship window from when the order is “received” by the warehouse to be fulfilled (i.e. out the door the shipping company - usually DHL / FedEx / UPS).Shipping to Customer: FedEx / UPS Ground service in the US will take approximately 2 - 5 days depending on where you are shipping from - If BrandXYZ’s warehouse is in Los Angeles (LA) and the customer is in New York City (NYC) that is a Zone 1 to Zone 5 timeline and it’s 5 business days. This is essentially not an issue for the UK, but certainly an issue that many of you are facing in shipping to Western Europe.Figure 1: Model 1 Drop Ship from Brand to Customer2. Drop ship to retailer on a per-item basis and then shipped onto the customerNow this may appear inefficient, because FashionSite.com is basically incurring all of the same transportation costs. However, for retailers who are hyper-focused on customer experience need to control the product risk and make sure that every customer receives their box with branded by the retailer.Adding this extra node to the link will obviously add some time, this process pushes back the delivery window pretty significantly:This is the logic for how these types of relationships can work - hence why this method has become so popular with the Private Sales phenoms like Gilt Groupe and Fab.com. The customer receives the “Private Sales Price” (i.e. a large discount on designer goods) in exchange for longer delivery windows, where the discount is designed to compensate the customer for the lengthy delivery window.The three windows that we should explain are:BrandXYZ Warehouse Fulfills Order: Same explanation as above, the warehouse’s contract states that the warehouse agrees to ship the order in one (1) to three (3) days after the order is received. Now the interesting little detail that I am going to add to that is: most 3PLs / outsourced warehouses will only accept orders for fulfillment that are submitted before 10am local time. Let’s take a look at how this can start throwing wrenches in the machine:Shipping from BrandXYZ to FashionSite.com: This is the same logic as in Model 1 - BrandXYZ’s warehouse is in Los Angeles and the order needs to travel to FashionSite.com who is in New York City - this is a 5 day window. Now maybe the Retailer will tell BrandXYZ to “Ship the order on the FashionSite.com’s DHL / UPS / FedEx Account.” BrandXYZ is generally going to try and avoid that because we generally add a 20% markup on shipping to cover the cost of outbound warehouse fees. Hence the shipment is going Ground-service to FashionSite.comShipping from FashionSite.com to Customer: FashionSite.com is in NYC and the Customer is in San Francisco, California - this is another cross country trip that takes 5-business days via DHL / UPS / FedEx Ground service.As retailers grow into larger companies and their inventory needs grow this process becomes more and more refined with better integrations with systems, agreements, and vendor compliance on shipping times that reduces the majority of these concerns.Figure 2: Model 2 Drop Ship from the Brand to Retailer and onto Customer3. Large orders are drop-shipped from factory to a major retailerThis version of the drop shipping model involves FashionSite.com placing a large order with BrandXYZ pre-season - roughly about six to nine months before the product is scheduled to be available to purchase by customers at retail. Considering the large quantity of the order, BrandXYZ instructs the factory to break their order up into two shipments - one explicitly for FashionSite.com and the other part for the balance of BrandXYZ’s customers.This model applies to when you are doing business with a large retailer that - most likely an Special Makeup Unit (SMU - a special color way or model that is designed & produced especially for a particular retailer). When a brand like BrandXYZ is doing significant business with a retailer like FashionSite.com, picking the order here in the US is too expensive (about $1.30/unit at standard 3PL rates) - hence BrandXYZ issues special instructions to their Chinese factory to cartonize the FashionSite.com order (where the FashionSite.com’s order is put into specifically delineated cartons) and then in a specific FashionSite.com container so the shipment can be easily separated at the Port and shipped to FashionSite.com.Figure 3a: Model 3a Drop Ship from the factory in China to retailer’s distribution centerFigure 3b: Model 3 Drop Ship from the factory in China to StoresThis approach is a more common approach to drop shipping when BrandXYZ is dealing with retailers with physical stores. The drop shipping agreement is setup to drive down the costs associated with fulfillment in the mannerWhat are the advantages of using this model?Positive Cash Flow:Once the drop shipping agreement has been arranged, the retailer is in a prime spot - they have product to sell, but they are not financially obligated to purchase any of it. When a customer places an order, the retailer receives the cash for the transaction and then enters into a financially binding relationship with the brand / manufacturer / supplier for transferring ownership rights of the product.In order to emphasize the biggest advantages of drop shipping, let’s use the hypothetical example of a product that:Retail Price: $100.00Wholesale Price: $50.00In this simple example, we are ignoring Sales Tax / VAT and Shipping Expenses (Inbound & Outbound).Reduces Inventory Risk:We all remember how scary and painful the Great Recession was and it actually becomes one of the most significant driving forces to widespread adoption of employing drop shipping as an inventory management technique..Drop shipping provides the cash flow flexibility to the retailer (only paying for what you sell) without the shackles of inventory from pre-packs or case-packs (pre-defined assortments that most of the time sticks the retailer with odd sizes or odd colors). Additionally, the manufacturer retains ownership of the product, so it reduces much of the apprehension and risk from consigning goods.Reduces Transportation Expenses:The theory of drop shipping is brilliant because it cuts out the retailer’s Inbound Shipping (the amortized cost for the shipment from the brand’s / manufacturer’s store to the retail shop), an example of which, we see below:In practice, the process of drop shipping - saves time & money to your organization.What are the disadvantages for using drop shipping?Uncertainty on Inventory AvailabilityDrop shipping relies on open and robust communication lines between the retailer and the brand. When you are working with a fully integrated system like Brightpearl, this process becomes infinitely easier as the Brightpearl API ensures that your retailers can have accurate up to the minute information about stock levels - in short, Brightpearl makes drop shipping a dream!However, most e-commerce retailers and brands / manufacturers / suppliers are just coming into the modern age of technology and as much as we would like the entire retail world to be flourishing under Brightpearl-enabled systems - this is not always going to be the case.In the US, there is only about 55% - 65% accuracy into the actual supply levels of retailers and brands at any given time in the country - in other words, the stated inventory levels of retailers and their suppliers (brands) will be inaccurate by 35% - 45%. This presents significant risks to the drop shipping model that we want you to be aware of and cautious in protecting your brand against.Brand Value RiskWhen employing a drop shipping model for your retail shop or e-commerce store, these inaccuracies can cause significant turmoil for your brand and do considerable harm to the customer experience that you are looking to cultivate. For example, if there are not appropriate inventory accuracy safe guards in place and a customer places an order for a “drop shipped” product then the retailer must manually contact the customer and inform him or her of the mistake. This process is always messy and involves a lot of time and frustration for your staff and your customer.In the age of Twitter, you can destroy any social traction by virtue of screwing up one order. Think about it - the prevailing theory for employing social tools is that it is supposed to market a brand effectively by virtue of communicating the fact that one member of the social group “likes” something and thereby his/her social network is more receptive to it being applicable to them.Do you want to know how pissed off a customer gets if they have executed a transaction, transmitted funds, and established an emotional expectation for the product - and it DOESN’T come? You can destroy any social traction & eliminate a large segment of potential users. In addition, you are competing in the age of Zappos & free overnight shipping. Even under the BEST timelines, you are still between a rock and a hard place.Now we are going to run through a couple of scenarios that underscore this risk:Scenario 1: Drop Ship Orders Compete with Brand Wholesale SalesDrop shipping relies on one inventory set from which the retailer has arranged to be able to “drop ship” orders from, but it is also the pool from which the Brand / Manufacturer / Supplier is selling to other customers from. To illustrate this point, the following example should offer some clarity as to the risks of this scenario:FashionSite.com has an existing drop ship arrangement with BrandXYZAt the beginning of every week, BrandXYZ forwards an inventory report to FashionSite.com to update their inventory levelsDuring the week, a customer places an order on FashionSite.com for 1 Medium Green T-ShirtOn that same day a major retailer like Nordstrom places an At Once order with BrandXYZ that pulls all of the stock of Green T-ShirtsFashionSite.com submits the order to BrandXYZ who is hyper-focused on the Major Retailers order and does not respond promptly to FashionSite.com about the unavailability of the inventoryThis creates a big problem for FashionSite.com - the odds of a prompt response to FashionSite.com are unlikely and FashionSite.com’s customer is the one who is adversely impacted by the relationshipThis major retailer, Nordstrom, most likely represents a large strategic interest for BrandXYZ that will be a launching pad for future growth. BrandXYZ will bend over backwards to fill every possible piece of this Major’s order leaving the drop shipper, FashionSite.com left out to dry.Additionally, BrandXYZ will generally send out the inventory reports one time per week - pushing the responsibility for inventory accuracy onto FashionSite.com, who understandably has no control over the situation. Furthermore, BrandXYZ will be frantic to hit jump through the hoops that major retailers require, meaning that it will be one (1) to three (3) days before the new inventory levels are sent back out to FashionSite.com. An information discount that can adversely impact sales and customer experience during the state of inventory availability flux.Scenario 2: BrandXYZ’s Competing Sale for Sale InventoryWhen dealing with drop shipping relationships, the retailer needs to be careful about protecting themselves. Most Brands / Manufacturers / Suppliers have explicit goals of driving 15% - 25% of revenue through consumer direct channels - meaning that your suppliers will come into competition with you more and more.Let’s use our favorite Medium Green T-Shirt example that we have been working from this entire series - both FashionSite.com and BrandXYZ.com receive orders for 1x Medium Green T-Shirt - the last one in stock. Both orders hit the system at the exact same time - when you take a look at the numbers, BrandXYZ simply cannot fulfill FashionSite.com’s order:BrandXYZ is seeking to build their e-commerce presence and it is in their best interest to fulfill the order to BrandXYZ.com’s e-commerce order. Simply put, FashionSite.com is in no negotiating position to command priority over BrandXYZ’s e-commerce orders - FashionSite.com’s customer suffers by virtue of this example.Vendor Risks1. Credit Risk WAY beyond your controlLet’s assume that we are talking about a 3PL model for warehousing & fulfillment and subsequently the 3PL warehouse is a vendor of BrandXYZ. As you know sales in Consumer Products are highly seasonal (Spring/Summer & Fall/Winter) and cash varies widely (i.e. BrandXYZ have HUGE cash outlays at the beginning of the season and gradually recoups them during the cash build cycle leading up to the end of the season when we dump it all back into the next season’s product).Think about the risks that you are taking on by virtue of not controlling your inventory and the fulfillment process. For example, let’s say that it is 1-mo into the season - I have just spent all my cash on buying the product, my revolving credit line is max’d because of just paying my suppliers, and my US Customs duties are scheduled to ACH my account. At this point, 70% of my product has already shipped to the stores, and BrandXYZ owes the warehouse $155k for receiving inventory and then shipping to all 300 retailers in the US. It is still a little early for reorders, so the 3PL is one of lower items on the Accounts Payable. It would not be uncommon to allow the 3PL to freeze BrandXYZ’s account for exceeding credit terms for 5-10 business days.The drop-ship person is screwed in this case as a 5 unit direct ship order is not going to incentive me to to deviate from my “Cash Expenditure Plan.” Cash Expenditure Plans are detailed analyses that every CEO/CFO knows about the most effective use of crucial cash that will be spent at the exact time that it needs to be to ensure the effective functioning of the brand.[Note: One of the main reasons that this happens for brands under $75m in Revenue is that a Major Customer’s (e.g. Nordstrom) invoice becomes un-factorable, meaning that I cannot sell the invoice to a bank and generate cash. This can destroy your cash management and is something that smart CFOs are constantly preparing for.]2. FedEx/UPS will only deal with the shipper (e.g. BrandXYZ as the owner of the shipment)One of the biggest problems with drop shipping is the use of shipping accounts for the actual fulfillment of the shipment from BrandXYZ’s warehouse to FashionSite.com’s customer. There are three main problems with this:BrandXYZ Insists on Using BrandXYZ’s FedEx Account: BrandXYZ is trying to aggregate as much business with FedEx to gain purchasing power that will be used to drive down rates for the entire company. More importantly, it is common for Brands / Suppliers / Manufacturers to “mark up” shipping - meaning that I always add 20% to FedEx Posted Rates to achieve the amount that I bill FashionSite.comFashionSite.com MUST use the FashionSite.com FedEx Account: None of the shippers will speak to anyone that is not the registered shipper on the account. Meaning that if the drop ship order for FashionSite.com gets screwed up, lost, or the customer needs to make a change - FedEx / UPS / DHL simply will not take to FashionSite.com. In a world where customer service is do or die and the lynch-pin for all retailers - this is a major risk that can significantly hurt customer experience3rd-Party Logistics (3PLs) / Warehouses Want in on the Action: After having worked with 7 different 3PLs (outsourced warehouses) in 3 different countries for 5 different brands - these people see shipping fees as part of their revenue model. Many of them will force their clients like BrandXYZ , for example, to use the 3PL’s FedEx Account - since they will be handling all the shipments and the warehouse pools the discount, it will be in every one’s best interest - WRONG!This seemingly simple shipping issue can cause huge problems for drop shippers and something that we want you to be aware of and protected against.Based upon Model 1 illustrated above, the order will most likely be fulfilled via BrandXYZ’s FedEx/UPS account. This means that I own the customer data & the shipment. What happens if the customer needs to change the shipment? FashionSite.com has no authority to act on the customer’s behalf. FashionSite.com cannot call FedEx/UPS to change delivery details or the order. Here would be the process:Customer Calls FashionSite.comFashionSite.com has cannot solve the customers problemFashionSite.com must place a call to BrandXYZ - who is under no obligation to respond in a timely mannerBrandXYZ will maybe get to it later today or tomorrowFashionSite.com’s customer experience suffers as a result3. Return ErrorsWhen an order is drop shipped from BrandXYZ’s warehouse to FashionSite.com’s customer - the order usually doesn’t look pretty. You know what I am talking about when you receive an order from ASOS / Gilt Groupe and it’s in the stylish Retailer packaging that makes you feel all good to open it.Traditionally brands like BrandXYZ have been hyper-B2B focused - meaning that making shipments look good was a distant second level priority to getting the shipment to the retailer as quickly and cost effectively as possible. However when you employ the Model #1 method of drop shipping, FashionSite.com’s customer is going to receive a packing list from BrandXYZ and most likely a packing slip from BrandXYZ’s 3PL / warehouse.Returns are a fact of life, but having the documents in the FashionSite.com shipment for BrandXYZ’s warehouse creates a huge level of uncertainty. About 70% of the time when I have shipped orders in this method - the order goes back to BrandXYZ’s warehouse and not to FashionSite.com - creating a whole world of headaches for BrandXYZ and FashionSite.com.Customers ALWAYS make mistakes and don’t understand how the business works. When BrandXYZ drop ships your order, BrandXYZ’s return details are included in the packing slip. FashionSite.com’s customers will most of time ship back to BrandXYZ. BrandXYZ will not have created a RA for the order and it will most likely get lost. BrandXYZ has no liability in this case as it’s FashionSite.com’s customer and order.You might be sitting there thinking that we spent an awful lot of time talking about problems that arise out of Model 1. Ironically enough, Model 2 arises to popularity in most e-commerce circles circa ‘08 / ‘09 when I started seeing the Privates Sales startups like Gilt, RueLaLa, and Hautelook almost universally adopt Model 2.Model 2 was created to provide retailers like FashionSite.com with the same drop shipping capabilities without the risks that we have described in detail here.For more specifics about shipping & fulfillment, check out: Matthew Carroll's answer to How do e-commerce startups, like One Kings Lane, Manpacks, and Dollar Shave Club handle the inventory fulfillment side, without a lot of initial investment? Are there drop-ship suppliers they work with, or manufactures outside of the US?