How Dropshipping Works in NetSuite (and Where Automation Is Required)

Table of Contents

1. Introduction
2. Native NetSuite Dropship Flow
3. Manual Bottlenecks
4. Supplier PO Challenges
5. iPaaS Platform Use Cases
6. Conclusion

Introduction

Dropshipping lets you grow your catalog without holding inventory. NetSuite, as a leading ERP, includes built-in dropship functionality that handles the basics; linking sales orders to purchase orders, routing items from vendors to customers, and keeping your accounting clean. But that native flow is designed for simplicity, not scale.

Once you're processing hundreds/thousands of orders across multiple vendors and sales channels, the cracks start to show. This blog post walks through what NetSuite Dropship does well, the bottlenecks that emerge at volume, and where automation platforms fill the gaps to turn dropshipping fulfillment management into a scalable, profitable operation.

Native NetSuite Dropship Flow

NetSuite supports dropshipping through its Drop Shipments and Special Orders feature. Once enabled, the system allows items to bypass inventory and ship directly from a vendor to the customer.

At a high level, the NetSuite Dropship flow looks like this:

1. You mark an item record as a drop ship item.
2. You assign a preferred vendor to that item.
3. A sales order is created and approved.
4. NetSuite automatically generates a drop ship purchase order.
5. The purchase order contains the customer’s shipping address.
6. The vendor ships directly to the customer.

Drop ship items are not received into inventory. They do not affect inventory asset accounts or stock levels. From an accounting standpoint, this keeps inventory clean and avoids unnecessary inventory transactions.

But reality hits fast when you scale.

Most vendors don't accept emailed purchase orders. Some require EDI, others provide APIs, and some only work with CSVs or XML files. NetSuite doesn't handle that diversity out of the box.

Vendor inventory isn't reflected in NetSuite unless you manually import it, which creates overselling risk. Staff copy and paste tracking numbers into item fulfillments by hand. Returns, without customization, pollute your inventory records.

High volume also strains NetSuite's governance limits. Scripts and API calls slow down. Your automated workflow becomes manual firefighting.

Manual Bottlenecks

Dropshipping brings volume; hundreds of SKUs, thousands of orders, multiple vendors. NetSuite Dropship’s native modules weren't built to handle that complexity without heavy lifting.

Item Record Creation Takes Hours

Creating a single item record in NetSuite can take five to 15 minutes when done manually. You need to mark the item as dropship, assign a preferred vendor, configure custom fields, and ensure accuracy across every entry. 

With dropshipping fulfillment management, you're dealing with high SKU counts. Mistakes ripple downstream into order routing, reconciliation, and financial reporting.

There's also no built-in way to browse vendor inventory before creating item records. You end up creating hundreds of thousands of records for products you might not even sell, cluttering your system and slowing operations.

Order Approvals and Status Updates

Every sales order and purchase order moves through a lifecycle: pending approval, approved, pending fulfillment, shipped. Each status change requires manual clicks; six to eight per order. When you're processing high volumes, that's hours of work each day.

NetSuite Dropship won't auto-create item fulfillments when tracking information arrives from vendors. Staff manually enter tracking numbers, mark orders as shipped, and update customers. Cross-referencing order numbers across Shopify, BigCommerce, Amazon, and NetSuite becomes a daily puzzle.

No Native Sales Channel Connectors

NetSuite doesn't connect natively to ecommerce platforms or marketplaces. You need third-party apps or custom development to pull orders from your sales channels into NetSuite. Without that connection, orders sit in limbo or get entered manually, increasing error rates and delaying fulfillment.

Supplier PO Challenges

NetSuite's dropship automation relies on one rigid concept: preferred vendor routing. That's the only logic available out of the box for automatically generating purchase orders.

Here's the problem.

Preferred Vendor Routing Is Too Simple

NetSuite Dropship lets you assign one preferred vendor per item. When a sales order is approved, the system cuts a purchase order to that vendor. If you have overlapping inventory; three vendors selling the same SKU; NetSuite can't dynamically choose the best one. 

You're stuck manually reviewing and changing purchase orders based on stock, price, distance to the customer, or delivery times.

According to industry operators managing NetSuite Dropship workflow, margin protection is the top priority when routing orders. You want the vendor with the lowest cost, the fastest delivery, or the fewest split shipments. NetSuite doesn't provide that intelligence natively.

Split Orders Happen Automatically

When a multi-line order includes items from different preferred vendors, NetSuite splits the order without hesitation. You can't configure logic to prioritize single-vendor fulfillment or avoid shipping from multiple locations. That drives up shipping costs and frustrates customers.

Limited Vendor Communication Options

NetSuite can email purchase orders to vendors. That's it. No EDI, no API connections, no scheduled file feeds. If your vendor requires a different communication method, you're building custom integrations, hiring developers, or manually transmitting orders through vendor portals.

That lack of flexibility becomes a scaling ceiling. Adding a new vendor means starting from scratch with integration work, and maintaining those connections falls on your team.

iPaaS Platform Use Cases

Integration platforms solve the gaps NetSuite leaves open. They sit between your ERP, your sales channels, and your vendors, automating the workflows that bog down manual operations.

Dynamic Order Routing

An iPaaS platform connects to all your vendors and pulls real-time inventory data. When an order comes in, the dropship automation platform checks which vendors have the item in stock, compares pricing, evaluates shipping zones, and routes the order to the best option based on your business logic; not NetSuite's preferred vendor field.

You sell automotive accessories. Three distributors carry the same SKU. One is closer to the customer, one offers a better price, and one has faster processing times. Dynamic order routing picks the vendor that balances cost and delivery speed, protecting your margin while meeting customer expectations.

Real-Time Inventory Sync

Vendors update their stock levels constantly. An NetSuite dropshipping automation platform pulls that data on a schedule; every 15 minutes, every hour; and reflects it in NetSuite. You stop overselling. Customers see accurate availability. Backorders drop.

Automated Item Fulfillment Creation

When a vendor ships an order and provides tracking, the iPaaS platform captures that data and creates the item fulfillment record in NetSuite automatically. Tracking numbers sync back to the sales channel. Customers get shipment notifications without anyone copying and pasting.

Vendor Connection Flexibility

NetSuite dropshipping automation platforms come with pre-built integrations for common distributors and the ability to connect via API, EDI, CSV, or XML. If a vendor only offers an FTP feed, the platform automates the file retrieval and mapping. If they have a Shopify or BigCommerce store, you connect directly to their catalog and order endpoints.

You're not limited by what NetSuite can do out of the box. You're connecting to vendors the way they want to work, not forcing them into email-based purchase orders.

Sales Channel Connectors

An iPaaS platform bridges the gap between your ecommerce platforms and NetSuite. Orders from Shopify, BigCommerce, Amazon, and Walmart flow into NetSuite as sales orders. Inventory levels sync back to each channel. You manage everything from one system without manually entering data or hiring developers to build custom connectors.

Simplified Vendor Onboarding

Adding a new vendor becomes faster when you're using an iPaaS platform. If the vendor is already integrated, you'll live in days. If they're new, file-based connections or API mappings replace weeks of custom development.

Flxpoint, for example, supports code-free file mapping and includes a vendor portal for suppliers without robust technical infrastructure. Vendors log in, fulfill orders, and provide tracking; all without requiring EDI or API capabilities.

Conclusion

NetSuite dropship works well for low-volume operations with simple vendor relationships. But when you scale; adding vendors, expanding SKU counts, processing thousands of orders; the native flow breaks down. Item creation becomes tedious. Preferred vendor routing limits your flexibility. Manual approvals and tracking entry eat up hours each day.

Automation fills those gaps. An iPaaS platform like Flxpoint connects your vendors and sales channels, routes orders dynamically based on your business logic, syncs inventory in real time, and handles fulfillment workflows end-to-end. NetSuite stays in your system of record, but the platform becomes the engine that powers scalable, automated dropshipping fulfillment management.

If you're ready to eliminate manual processes, reduce overselling, and protect your margins, explore how Flxpoint integrates with NetSuite to automate your dropship operations from end to end.

Flxpoint – Powerful Dropship and Ecommerce Automation Platform