ShipTurtle supports both marketplace and dropship business models each with distinct operational and billing flows. While both models can function similarly on the surface (products are sold and shipped to customers), the financial transaction and invoicing flows differ, which affects how revenue is recorded and how invoices are generated.
1. What Is a Marketplace?
A marketplace is a platform where multiple sellers (vendors) list and sell products directly to customers. The marketplace operator (merchant) facilitates these transactions by providing the platform, tools, and infrastructure and typically earns revenue through fees or commissions.
Key Characteristics
- Multiple vendors sell to customers
- Vendors own inventory and pricing
- Merchant earns through commissions, platform fees, or subscriptions
- Vendor billing and customer billing are separate
2. What Is Dropshipment?
Dropshipping is a business model where the merchant sells products without holding inventory. When a customer places an order, the merchant forwards the order to a supplier or vendor who then ships the product directly to the customer.
Key Characteristics
- Merchant owns the customer relationship
- Merchant invoices the customer
- Vendor supplies the product and ships it on behalf of the merchant
- Merchant manages customer expectations, pricing, and delivery flow
3. Operational Differences
Both models involve product listings, orders, and shipments but the billing and invoicing flow differentiates them.
Marketplace Model
- Customer is buying from the vendor
- Vendor invoices the customer
- Merchant earns platform fee/commission from the vendor
Example:
- Vendor offers product at $100
- Merchant lists and sells it for $150 on the marketplace
- Customer pays $150 to the vendor
- Merchant charges vendor a platform/service fee of $50 (may incur tax depending on region)
- Vendor’s final earnings = $150 – $50 – (applicable tax)
How ShipTurtle handles it:
ShipTurtle assigns orders to the vendor, tracks commissions, and generates vendor payouts and platform fee reports while keeping vendor and customer transactions distinct.
Dropship Model
- Customer is buying from the merchant
- Merchant invoices the customer
- Vendor invoices the merchant for goods sold (less merchant margin)
- Merchant handles delivery expectations and returns
Example:
- Vendor offers product at $100
- Merchant sells to customer at $150
- Customer pays merchant $150
- Vendor invoices merchant $100
- Merchant retains the difference ($50 margin)
How ShipTurtle handles it:
ShipTurtle manages order flows, inventory sync (if applicable), and invoice document workflows according to dropship billing while ensuring orders and payments are reflected correctly.
4. Billing & Accounting Considerations
Although ShipTurtle supports both marketplace and dropship billing flows:
- Marketplace billing involves vendor invoicing, platform fees, and vendor payouts
- Dropship billing involves merchant invoicing customers and vendor invoices to merchant
Important: Tax laws, invoicing requirements, and revenue recognition rules vary by country and region. We recommend consulting a qualified accountant or tax professional for accurate accounting and tax compliance for your business model.
5. How ShipTurtle Supports Both Models
ShipTurtle’s platform is flexible enough to support:
- Marketplace transactions with vendor assignment, commission tracking, and payout generation
- Dropship transactions with merchant‑centric invoicing and vendor billing support
This flexibility allows you to operate multiple models concurrently if needed (e.g., a marketplace with select dropship products or premium vendor inventory).
If you’re stuck, reach us at team@shipturtle.com or open a ticket on the support page.