QUESTIONS regarding on payment process and paying suppliers! waiting for payment to be processed?

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Tourist
5 0 1

Pretty new to dropshipping and having a hard time finding the right answers! Your help would be greatly appreciated

 

To my understanding, dropshipping sales model requires us to only make the payment once an order has been made on our store. Here are the questions:

 

1.  How do I pay my supplier once an order has been made but I have to wait a few days for the customer's money to be available for use in my bank account? Wouldn't this slow down the whole shipping process all together? 

 

2. if someone checkouts using via PayPal, are the funds available in my account to use to pay my supplier right away? 

 

3. The supplier I am in contact with says, they already work with dropshippers. Does this mean my supplier will send an invoice after 15 to 35 days for the payment to be made? (giving me time to process any refunds and allowing the payment to go through) 

 

wouldn't waiting for the money to go through add another week to the shipping time? doesn't this defeat the whole purpose of "dropshipping" sales model as it is taught everywhere? "Only pay once your customer pays" 

 

stuck on this part of my dropshipping journey, came to realize this situation when I was choosing what payment gateway is the best option for my store. Any information helps ! Thank you 

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Shopify Staff
Shopify Staff
479 41 105

Hi, @chj6!

 

Julie here from Shopify Support.

 

It's exciting to hear that you're new to dropshipping — there's definitely a lot to learn! I'm happy to answer your questions and to keep things simple, I'll just respond to them in the same format they were asked. 

 

1. Once a customer places an order on your online store, you're then responsible for fulfilling the order by ordering the product directly from the supplier. Depending on the payment gateway you're using, payout times may differ, so it's good idea to check with your gateway so you know when to expect your payouts. If you're using Shopify Payments, you can check out our list of pay periods by country here. It's also important to note that payouts are not immediate and it can take a couple of business days to receive the funds. For this reason, it's strongly recommended that you have a reserve of funds set aside so that you can fulfill orders immediately, instead of waiting on a payout. 

 

2. If a customer processes a transaction via PayPal, then PayPal is responsible for releasing the funds to you. Typically, these funds aren't released immediately and instead there are scheduled pay periods. I suggest contacting PayPal directly for more information about their pay periods. Before launching your store, it's also a good idea to finish setting up your PayPal account in Shopify. This will ensure that you are already set up to receive the funds. 

3. Are you using a dropshipping app like Oberlo, or are you working directly with your own supplier? If you have your own supplier, then you'll just need to discuss the payment and fulfillment with them. If you're using Oberlo, on the other hand, then you can check out our help doc on how to place and fulfill orders

 

You're completely right in that waiting for your payout will delay fulfillment, which will impact the time it takes for your customers to receive their orders. Most dropshippers get around this by ordering from their suppliers using their own credit card as soon as the order is placed by the customer. The supplier can then ship the orders straight away and the merchant will receive their payout a couple of days later. Not only is this a good business practice, but it can also lower your risk against chargebacks. This is why it's extremely important that your business is prepared to fulfill orders as they are received. 

 

While dropshipping is definitely a less expensive way to start selling product online, like any business, it's not free. If you're looking to learn more about the dropshipping business model and costs associated with it, I recommend checking out Oberlo's blog post, "How Much Does it Cost to Launch a Dropshipping Store?". Even if you aren't using Oberlo, this blog post is full of some great advice for those new to dropshipping. 

 

I hope this helps! I'd love to hear more about your business plan and the types of products you're selling. Feel free to respond here and let me know.

Julie | Social Care @ Shopify
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