1. You have to manage the dropship requests with the vendors and ensure that your customers receive the products on time. I have seen cases where the vendors do not ship on time. And when they do, sometimes they ship the incorrect product. This will directly affect your customer satisfaction levels.
2. As your vendor count increases, the complexity of managing all those vendor relationships also increases.
3. You no longer have strict control over the look and feel of the package being shipped. While the vendor will use the label provided by you, they may not agree to adhere to other packing requirements.

It is good to be aware of these issues while negotiating the drop ship contracts with your vendors.

I’ve written quite a bit on the pros and cons of manufacturer drop shipping. You can see a synopsis and get to an article I wrote for Practical E-commerce to demystify . Learn how manufacturers and suppliers can offer drop ship; how they can save money doing it while growing market share. Learn about pitfalls and successes. The full article and other trends for drop shippers in in the Shipwire profile on practical ecommerce

Shipwire provides ecommerce order fulfillment and pick-pack services for manufacturers and retailers. We even have a free Volusion module to automate your volusion store with warehouses in the U.S., Canada and the U.K.. http://www.shipwire.com/help/volusion_fulfillment/

If you want to see a case study about a manufacturer that has grown massively by mastering drop shipping look no further than Keetsa. A mattress company that ships mattresses in a box. They learned that free shipping and free drop shipping allows them to sign-up retailers faster and provide a seamless customer experience. They are both manufacturer and retailer so you can learn about controlling MSRP as well. They are also eco-friendly, so learn about how drop shipping and centralized inventory management helps them reduce their carbon footprint. http://www.shipwire.com/help/green-supply-chain-case-study/

Happy drop shipping. Thank you Volusion for talking about drop ship on your blog and pointing it out to me over twitter for comment.

Nate G
Shipwire fulfillment