Drop-Shipping and Customer Service

by WholDir on 09-21-2012 in Drop Shipping Central

Drop-Shipping and Customer Service

For a business that moves product and operates with a small profit margin or a start-up using a bare-bones e-commerce platform, drop-shipping can seem like a very attractive alternative to traditional wholesale purchase, storage, selling and distribution at the retail end. However, drop-shipping is only effective to the extent the entire system operates with accurate customer fulfillment. Because the entire process is electronic, a business is far more exposed to mistakes by external parties in meeting customer purchases and order details.


Customers' Trust is Critical

The worst thing that can happen after instituting a drop-shipping is to lose customer confidence in the ordering and purchase fulfillment process. Particularly for e-commerce businesses, customer trust that the order follow-through will occur as expected it critical. People get irritated very quickly having to wait longer than expected or when orders arrive that are inaccurate or incorrect.

So how involved a business is with its supplier or wholesaler supporting the drop-shipping system matters greatly on the success with customer happiness. Normally, these issues are taken care of by the business with quality control when the seller’s employees confirm everything is packaged correctly before shipping. However, the drop-shipping approach uses a third party entirely. So the seller has to be sure the wholesaler will actually follow through as expected. 

Proactively Protecting Customer Accounts

A business that relies on drop-shipping needs to regularly evaluate its system with the following factors to ensure customer relationships are being protected:

Communication  – The building block to a good drop-shipping customer fulfillment starts with clear, accurate communication. The system that captures the customer’s order and payment has to transfer all the necessary information required to identify the given product, inventory number, quantity, buyer’s address and costs so that the wholesaler can 1) ship the product correctly, 2) confirm the itemized order has been fulfilled correctly, and 3) process its own payment from the seller correctly. If the system used can’t communicate these elements consistently every time, mistakes will occur immediately.

Tracking and Planning  – A seller and wholesaler need to be in sync with each other ahead of time on inventory. A seller can’t go and process wonderful, big orders without knowing whether his supplier on the other end even has the free inventory to commit. In many cases there is lead time that needs to be allowed, no matter how fast an electronic system can function. Wholesalers pull their inventory from multiple sources as well, many of them smaller manufacturers who perform based on demand from middleman wholesale businesses that take large amounts of stock to resell. So a seller who doesn’t coordinate sales planning and order fulfillment timing will have a world of pain when the wholesaler can’t commit to the promises made.

Shipping Care - Customers also want their product to arrive in perfect, new condition since that’s what they paid for. Sellers have to make sure whoever they use for drop-shipping utilizes correct procedures to not only track and deliver an order correctly but also make sure the product arrives intact and not broken. Clumsy order-shipping ruins more customer accounts than other reasons simply due to carelessness and cutting corners for pennies. Unfortunately, the supplier is already paid, so the seller ends up eating the loss with the customer complaint and demand for a refund.

Customer Service – Keep in mind, no drop-shipping system is exactly perfect. As a result, there will be mistakes and a seller’s business will have to have a plan in place for how to deal with such problems. It may be a review of the case first, a full guarantee and refund policy, or some other plan. Whichever the case, how the customer is handled up-front when upset can keep or lose a customer account in a matter of minutes. Where mistakes do occur, the seller should have a quality monitoring system in place to determine where the fault is. Repeat issues quickly show patterns and where things need to be fixed quickly with a drop-shipping supplier.

Conclusion

A business lives and thrives on happy customers buying and returning for more. Because drop-shipping has so many external pieces involved, a seller trades operating cost for higher risk of things going wrong. As a result, more attention has to regularly be spent on monitoring those external parties such as suppliers or wholesalers to keep the system working right. Otherwise, all those valuable customers will go to someone else who can sell a good product correctly.

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