Odoo Dropshipping for Australian Wholesalers: How the Dropship Route Works and What It Does to Your Books

Odoo dropshipping is a route. Turn on Dropshipping in the Purchase settings, put a vendor on the product and tick the Dropship route on its Inventory tab. Confirming a sales order raises a request for quotation to that vendor, and confirming the RFQ creates a DS transfer from Partners/Vendors to Partners/Customers. Stock on hand never moves, but the cost still lands in cost of goods sold when you validate.

At a glance

• Who it is for: Australian wholesalers and distributors on Odoo, or moving to it, who sell some lines they never hold: bulky items shipped from the manufacturer, special orders, or a supplier’s full catalogue sold on top of your own stock
• Problem it solves: dropship sales keyed twice (once as a sale, once as a purchase), purchase orders that never link back to the customer order, warehouse reports polluted by goods that were never on the shelf, and margin that disappears because the cost was never recorded against the sale
• Platforms: Odoo 18, 19 and 20, Community or Enterprise; the Drop Shipping module (stock_dropshipping) is shipped by Odoo S.A. and installs with the Dropshipping setting, so no paid app is involved
• Typical cost: no extra licence; Odoo lists Standard at A$43 and Custom at A$80 per user per month on yearly billing ex GST (A$34.40 and A$64 for the first 12 months), with the Odoo 20 light user at A$12.90, per our Odoo implementation packages page as at October 2026; configuring the route is a few hours inside an implementation that runs A$25,000 to A$120,000 ex GST for most SMEs
• Typical timeline: half a day to configure and test on a handful of products; the longer job is deciding which products, which vendors and what the customer-facing documents say
• Last verified: 25 October 2026 against the Odoo 20 dropshipping documentation, the Odoo 20 stock_dropshipping and stock_account source on GitHub, and the ATO’s GST and Australian businesses page (last updated 11 September 2025)

Dropshipping has an ecommerce reputation it doesn’t deserve in wholesale. Most Australian distributors we work with already dropship something: a pallet of pipe sent from the mill straight to a site, a special-order appliance the manufacturer ships direct, a supplier’s long-tail catalogue the distributor sells but will never stock. The question is whether the system records it as one linked transaction or three unlinked ones. This post covers how Odoo’s Dropship route does it, what it changes in your stock and accounting reports, and the GST point that catches importers.

What does the Dropship route do in Odoo?

Odoo’s Drop Shipping module adds three things to a database: a route called Dropship, an operation type called Dropship, and a stock rule that joins them. The module’s own description puts it plainly: goods go directly from vendors to customers without going through your warehouse, so no internal transfer document is needed.

The pieces, from the Odoo 20 source:

• The Dropship route. It can be selected on a product, on a product category and on a sales order line, so you can make a whole category dropship-only, leave one product with both Buy and Dropship, or decide order by order.
• The Dropship operation type. It has no warehouse. Its default source is Partners/Vendors, its default destination is Partners/Customers, and its documents are numbered with a DS/ prefix. It sits alongside Receipts and Delivery Orders on the Inventory Overview, with its own Dropships list under Transfers.
• The rule. One pull rule, Partners/Vendors to Partners/Customers, with the action Buy. When a sales order line needs a dropshipped product, that rule is what generates the purchase.

Because the goods never touch an internal location, the Odoo 20 dropshipping documentation notes that dropshipped products are not reflected in the Locations report or the Aging report. That is different from consignment stock, which sits in an internal location and shows in Locations and Moves Analysis but is excluded from Stock Valuation. If a supplier parks stock in your warehouse, that is consignment, not dropshipping.

How do you set up a dropshipped product?

Four steps, all in standard menus:

1. Turn the feature on. Purchase, then Configuration, then Settings. Under Logistics tick Dropshipping and save. This installs the module and creates the route, operation type and rule for every company in the database.
2. Make the product sellable and purchasable. On the product form both Can be Sold and Can be Purchased must be ticked. A dropshipped product is both at once.
3. Add the vendor. On the Purchase tab add the vendor and the price they sell it to you for. You can list several vendors; the one at the top of the list is selected for the purchase order automatically, so order matters.
4. Tick the route. On the Inventory tab, under Routes, tick Dropship.

The documentation adds one useful note: you don’t have to enable Buy as well, but if you do, the same product can be dropshipped or purchased into stock, and the choice is made on the sales order line. For a distributor that stocks the fast movers and dropships the rest of a supplier’s range, that is the setting you want. In the Odoo 20 code a line carrying the Dropship route is treated like a make-to-order line for the availability widget, so the sales team sees that the line will be sourced rather than picked.

If you want vendor pricing to flow correctly, the vendor pricelist on the Purchase tab needs the quantity breaks and lead time filled in, because the generated RFQ reads them. Odoo purchasing: purchase orders, RFQs and what you can automate covers the vendor pricelist in more detail.

What happens when you confirm the sales order?

The sequence, as documented for Odoo 20 and confirmed in the source:

• Confirming the sales order creates a request for quotation to the product’s vendor. On the sales order a Purchase smart button opens it. Nothing has moved yet.
• Confirming the RFQ turns it into a purchase order and creates a dropship transfer linked to it. The purchase order shows a Dropship smart button, separate from the usual Receipt button, and the sales order gets its own Dropship button, separate from Delivery. If a single purchase order covers lines from more than one sales order, Odoo 20 creates one dropship transfer per sales order, so each customer’s goods stay on their own document.
• The dropship transfer shows Partners/Vendors as the source and Partners/Customers as the destination. When the vendor confirms the goods have been delivered, you validate it. That one click records the delivered quantity against the sales order line and the received quantity against the purchase order line.
• Open dropships sit on the Inventory Overview on the Dropship card, labelled To Validate, and in the Dropships list under Transfers.

Two things the flow does not do. It does not tell the vendor anything by itself: the purchase order is what you send, and the customer’s delivery address is on it, so check your purchase order template before the first live one goes out. And it does not stop a purchase that needs sign-off: if you use a minimum approval amount on purchases, a dropship RFQ over the limit waits for approval like any other, which Odoo purchase order approvals explains.

You can also dropship from the purchasing side without a sales order. The Odoo 20 RFQ documentation describes a Deliver To option of Dropship on a manual RFQ, which enables a Dropship address field for the end customer. The same page notes that RFQ grouping skips dropship orders, so Odoo will not merge a dropship purchase into a vendor’s stock replenishment order.

What does dropshipping do to your stock valuation and cost of goods sold?

This is where a lot of dropship setups outside Odoo go wrong: the sale is recorded, the supplier bill is expensed somewhere, and nobody can see the margin on the order. Odoo 20 handles it in the stock accounting layer, and it is worth knowing how.

In the stock_account source, a completed move from a supplier location to a customer location is flagged Is Dropship. When the transfer is validated, the move is valued the way a receipt is valued, at the purchase cost, and that value is written to cost of goods sold in the same step. The move is deliberately not counted as incoming stock, so quantity on hand and the stock valuation report are untouched. With automated inventory valuation on, you get a cost of sales entry against the sale without a stock movement; with manual valuation, the cost is still recorded on the move for the margin reports.

The practical consequences for an Australian wholesaler:

• Margin reports work. The sales analysis shows the dropshipped line with its cost, so a dropship-heavy supplier range can be judged on gross margin, not revenue.
• Stock reports stay clean. Nothing dropshipped appears in on-hand quantities, forecasted stock or your reordering rules, which is correct, because you never held it.
• Returns are handled. The Dropship operation type carries a return operation type setting, and a return from the customer location back to the supplier location is valued as a returned dropship rather than as a receipt into your stock.
• Documents use the delivery description. On a dropship transfer the product’s Description for Delivery Orders is printed, not the receipt description, which matters if your receipt descriptions carry internal bin codes.

“The dropship conversation we have most often is not about Odoo. It’s a distributor who has been dropshipping for years and has never once seen the margin on it, because the sale sat in one system and the supplier invoice in another. Getting the three documents linked is the job. The route is the easy part.”

Josh Craig, Director, Auboros

Which route should each product use: Buy, MTO plus Buy, or Dropship?

A distributor rarely wants one answer for the whole catalogue. The three common routes differ in where the goods go and what Odoo creates.

For stocked lines, the receipt and delivery side is covered in Odoo pick, pack and ship. Dropship removes that whole chapter for the lines it applies to.

Is GST on dropshipped goods different in Australia?

For a domestic dropship, no. Your vendor is an Australian supplier, their bill to you carries GST you claim as a credit, and your tax invoice to the customer charges GST at 10% as usual. Odoo’s standard GST on Sales and GST on Purchases taxes do the work, and the Business Activity Statement (BAS) picks it up like any other sale and purchase.

The catch is the overseas dropship, where the goods are outside Australia when you sell them and the manufacturer ships straight to your Australian customer. The ATO’s page on GST and Australian businesses buying imported goods and services (last updated 11 September 2025) says that if you are an Australian GST-registered supplier and you drop ship, you have to account for GST on your sale of low value imported goods, and it defines drop shipping as sales of goods located overseas at the time of sale and sent directly to your customers in Australia from an overseas source. The same page sets out that consignments with a customs value of A$1,000 or less have no GST or duty collected at the border, while consignments over A$1,000 have GST, duty and charges payable by the importer at the border.

Three Odoo settings follow from that. The overseas vendor’s bill usually carries no GST, so the purchase tax on those vendor pricelist lines should reflect that. Your sale to the Australian customer is still a taxable sale at 10% on a low value consignment, so the customer tax stays standard. And if the consignment is over A$1,000, the border GST and duty are an import cost that belongs with your landed cost and deferred GST setup, which Odoo landed costs and deferred GST walks through. If you dropship overseas goods to Australian customers at any volume, this is one to confirm with your tax adviser against the ATO page rather than assume.

Five decisions before you turn dropshipping on

• Which products, and who decides per order. Route on the product category for a supplier range you never stock; both routes on the product for lines you sometimes hold; route on the sales order line only if the sales team understands what the choice does.
• Vendor order and lead times. The top vendor on the Purchase tab gets the order. Fill in the lead time so the delivery date promised on the sale is real.
• What the vendor sees. The purchase order carries the customer’s delivery address. Decide whether your purchase order template shows your sell price (it should not) and whether the vendor’s packing slip will show theirs.
• Who validates the DS transfer, and on what evidence. A proof of delivery or tracking confirmation from the vendor is the trigger. Validating on the vendor’s invoice date instead inflates delivered quantities before the customer has the goods.
• Invoicing policy. If the product invoices on delivered quantities, the customer invoice can only be raised once the DS transfer is validated. If it invoices on ordered quantities, you can bill at confirmation, which many distributors prefer for special orders paid up front.

Dropshipping sits naturally next to the rest of a wholesaler’s Odoo setup: supplier replenishment, inter-warehouse resupply and the delivery steps for stocked goods all use the same routes engine. If the whole picture is what you need, ERP for wholesale distribution in Australia covers it, and our Odoo partner in Brisbane page covers how we deliver it.

Goes well with

• Odoo pick, pack and ship for Australian wholesalers for the delivery steps the stocked lines still go through
• Odoo purchase order approvals for the sign-off a dropship RFQ over your limit will wait on
• Odoo landed costs and deferred GST for importers for the over-A$1,000 consignments that attract GST at the border

Dropshipping some of your range and never seeing the margin on it?

We set up Odoo for wholesalers across Brisbane and Queensland, and the dropship route is usually a half-day inside a wider purchasing and inventory build. If you want to see a sale, its RFQ and the DS transfer linked on your own products, book a free consultation and bring one supplier’s catalogue. No obligation, and we’ll tell you if Buy is the better route for it.