Product distribution can be handled several ways. A manufacturer may choose to handle distribution internally. Or, it may outsource it to a logistics company or fulfillment house. A third solution is to have a drop shipper, who owns the merchandise, deliver it to retailers.

One Type of Product Distribution

Fulfillment centers handle product distribution by storing your merchandise for you and delivering products to your customers. They are also known as third-party logistics providers (3PL) although that usually refers to companies that manage the whole supply chain process. With fulfillment centers, you own the merchandise. You have control over how the products are packaged and shipped, and your logo and company name are most likely on the package somewhere.

Fulfillment houses offer a broad range of services and some will cater to small volume companies. Particularly with web businesses, some companies need to deliver orders as small as one piece. The right fulfillment house will offer that service to you.

Drop shippers handle product distribution a little differently. The drop shipper is basically a wholesaler who owns the merchandise. It ships it directly to your customers and typically serves many retailers. You would take the orders and payments, then forward the orders to the drop shipper, which then delivers the items directly to your customer. You earn a commission on the sales, usually much less than what you would make on sales through your own company or using a fulfillment center.