Drop Ship Process in NetSuite

Marking an Item as Drop Ship

To set up an item for drop shipping in NetSuite, follow these steps:

1. Navigate to Lists > Accounting > Items.
2. Select an existing item or create a new one (Inventory or Non-Inventory).
3. Under the Purchasing/Inventory tab:

• Check the Drop Ship Item checkbox.
• Assign a Preferred Vendor.

1. Save the item.

Sales Order Creation for Drop Ship Items

1. Navigate to Transactions > Sales > Enter Sales Orders > New.
2. Select the customer and enter the drop ship item.
3. Ensure the item is linked to the Preferred Vendor.
4. Save and approve the Sales Order.
5. NetSuite automatically generates a Drop Ship Purchase Order (PO).

Vendor Processing & Billing

1. The vendor ships the item directly to the customer.
2. The vendor provides tracking details and an invoice.
3. Enter the Vendor Bill:

• Navigate to Transactions > Payables > Enter Bills > New.
• Reference the Drop Ship PO.
• Save and approve the Vendor Bill.

Customer Return Process

Authorizing Return from Invoice

1. Create a Return Authorization (RMA):

• Navigate to Transactions > Sales > Enter Return Authorizations > New.
• Select the customer and link the return to the original Invoice.
• Ensure the Drop Ship checkbox is checked.
• Choose the return type: Refund, Credit Memo, or Replacement.
• Save the Return Authorization.

1. Provide the vendor’s return address to the customer.
2. The vendor inspects the item and confirms acceptance.

Processing Vendor Credit & Customer Refund

1. Enter Vendor Credit:

• Navigate to Transactions > Payables > Enter Vendor Credits > New.
• Select the vendor and enter the credit amount.
• Apply the vendor credit to the original Vendor Bill.

1. Issue a customer refund or credit memo:

• Transactions > Customers > Issue Refunds (if refunding the customer).
• Transactions > Customers > Create Credit Memos (if issuing store credit).

Authorizing Return from Purchase Order

1. Navigate to Transactions > Purchases > Enter Purchase Orders > List.
2. Open the Drop Ship Purchase Order.
3. Click Authorize Return, generating a Vendor Return Authorization.
4. NetSuite automatically links this return to the original PO and vendor.
5. Contact the vendor to confirm return acceptance.
6. Once the vendor accepts, they provide a vendor credit.
7. Enter the Vendor Credit:

• Navigate to Transactions > Payables > Enter Vendor Credits > New.
• Select the vendor and apply the credit to the relevant Vendor Bill.

1. Ensure that the customer refund or credit memo is issued accordingly.
2. Validate the financial impact in reporting to avoid duplicate adjustments.