Drop shipping entails shipping goods directly from your vendor to your customer without holding the items as inventory in your warehouses.

A drop ship warehouse does not actually contain items; it is a ‘virtual’ warehouse. The moment the goods ‘enter’ the drop ship warehouse, you ship them to your customer.

In order to work with drop shipping in SAP Business One, you must create a drop ship warehouse. You can use drop ship warehouses to manage serial and batch items as well. SAP Business One does not record any inventory postings when you use drop ship warehouses in documents.

When you work with a perpetual inventory system, documents in which drop ship warehouses are used create journal entries that do not reflect the inventory value of the items received or released from a drop ship warehouse.


  • When you manage items in a drop ship warehouse, as well as in other warehouses, inventory posting occurs when you create documents involving the real warehouses.
  • You cannot use drop ship warehouses for the MRP run.