Work out drop ship cost comparison instantly with clear inputs, formula shown and shareable results.
Comparing drop shipping with in-house fulfilment requires the in-house figure to include the inventory holding cost that drop shipping avoids entirely. Excluding it makes in-house look cheaper than it is, since a warehouse's real cost is stock as much as labour.
In-house cost
In-house = Pick, pack and ship cost + Attributable inventory holding cost
Advantage
Advantage = In-house cost - Drop-ship fee
Loss of control over packaging, delivery experience and returns, plus reduced ability to consolidate multi-line orders into one parcel.
For bulky, slow-moving or high-variety items where holding stock is expensive and demand is hard to forecast.