Virtual Inventory Management
Whatever you may call it, there is a profitable retail trend towards eliminating inventory holding costs and warehouse expenses, by having suppliers ship products directly to customers. This fulfillment model enables the retailer to rapidly expand its product offerings without tying up additional capital.

While selling "other people's products" without ever owning or warehousing the inventory seems like the holy grail of e-commerce, most retailers have failed to achieve the level of control necessary to manage the process, ultimately resulting in unacceptable customer service levels.

When suppliers ship products directly to a retailer's customers, it becomes difficult to ensure that they are delivered in accordance with the retailer's performance requirements. As order volume increases, it becomes an even greater challenge to manage open items, cancellations, late shipments, and even lost orders. As a result of informational "black-holes", retailers are many times left unable to answer the fundamental question, "Where is my order?" Furthermore, since a retailer is selling out of suppliers' warehouses, it is important that items being sold by the retailer are actually available for shipment. Unfortunately, very few suppliers are capable of providing a standard inventory feed to the retailer's system. And because most suppliers are not capable of producing a retailer's specific packing slip, it is difficult to achieve supplier transparency, as well as a consistently branded customer experience.

Software is available that enables retailers to monitor the entire supply chain at a single glance so that they can provide outstanding customer service, even in a drop-ship fulfillment model. By providing real-time order status and delivery information along with exception based alerts, retailers can proactively resolve potential fulfillment problems before they ever impact the customer. By gaining control and management over the remote fulfillment process, suppliers literally become a virtual extension of the retailer's enterprise. Additionally this software enables a seamless customer experience by enforcing business rules and quality standards among suppliers, and by providing retailer-branded packing slips for inclusion with each shipment.