Efficient Drop-Shipping Matters

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

Efficient Drop-Shipping Matters

Since 2008 the downturn in the national economy has affected everyone trying to move or sell products or services. Businesses big and small have all been affected, with far more competition chasing after fewer dollars. As a result, even those businesses that work on an e-commerce platform with the benefit of drop-shipping have seen their markets shrink and get harder to generate the same amount of revenue.


The above said, more and more businesses are looking to drop-shipping to remove bulky internal distribution costs or costly infrastructure to save money as well. This is where e-commerce stores have the edge over their brick-and-mortar cousins. However, they still need to make sure their drop-shipping systems are working efficiently and consistently as it means the distribution now has direct contact with the customer versus the business’ own go-between.

Obviously, drop-shipping makes it cheaper to ship directly from a supplier to a customer based on digital or electronic ordering and transactions. The customer orders, the business gets payment, directs the shipment, the wholesaler or supplier sends out the order, the business pays the supplier and the customer gets his goods. On paper it sounds like a good, cheaper system. The traditional approach buys from a wholesaler, stores product at an internal facility, waits for purchase and then sells to customers.

Yet not every supplier and wholesaler is set up to perform adequate drop-shipping services. While many may offer the service, a business has to make sure the supplier is up to par. This means, the wholesaler has to be able to show it has the ability to receive a singular or small order, package it up, confirm the shipping and send it directly to an individual customer per the buyer’s order. Australian Dropshippers Directory explais the importance of  a good ordering and returns sytem that must be established by drop ship suppliers.

Drop-shipping is far different than what a wholesaler normally does which is move bulk product to a buyer who then sells all the individual distribution at the retail level. Instead, successful drop-shipping requires the supplier to actually start behaving a bit like a retailer when it comes to final, end-point mailing of product to the retail customer.

The buyer is on the hook to make sure the whole system works well in terms of fulfillment to the customer. So while drop-shipping sounds like an easier, cheaper way to manage everything electronically without even operating a warehouse, drop-shipping has significant pitfalls if it doesn’t work right. And that can spell trouble during very competitive times, losing valuable customers.

A successful, efficient drop-shipping system must have the following elements in place and tested:

•  Automated Information and Ordering Management – While the front end is likely taken care of with an e-commerce platform, digitizing ordering and customer payment, the back end of a business has to be the same as well. Once the order is received the system also needs to electronically transfer approved orders to the supplier in real time to initiate the drop-shipping timely. The wholesaler or supplier has to have a compatible system to pick up the order, process it, track it, and deliver as well as take payment from the buyer. Then the information has to be sent back to the buyer for records and fulfillment confirmation. This can be a very complex system just doing the above and nothing else. To read more of a detail about this very important process, please read : Drop Shipping in Australia - Managing Orders and Returns

•  Speed of Transaction Confirmation is Critical – If a supplier is running a drop-shipping system manually, that’s a red flag for potential problems. A good wholesaler in drop-shipping runs receipts, packaging and fulfillment of orders automatically, sending back status reports and confirmations electronically to the buyer in real-time. This avoids multiple weekly delays that get customers irritated quickly. It also allows mistakes to be caught quickly.

•  Detail-Specific Confirmation  - Because many e-commerce businesses as well as brick-and-mortar stores going electronic frequently sell multiple products, the drop-shipping used has to be able to confirm fulfillment of each item component of an order. If a customer purchase 10 different items, each one needs to be tracked and logged as in stock, packaged and shipped to confirm the entire order correctly. Drop-shipping systems that don’t provide order detail at this level should be avoided. It just means more headaches in fulfillment failures when something goes missing. 

Conclusion

Efficient drop-shipping should not end up creating a bureaucracy of databases and paper like some 18th century assembly-line factory. Each transaction should flow from the e-commerce retail platform through the system and back with individual item confirmation for each step of the way. If a supplier or wholesaler can’t provide this kind of detail, a buyer needs to look elsewhere for a drop-shipping partner. Fulfillment success is key to e-commerce platforms working, and the critical component is the wholesaler operating at the same automated level as the retail buyer. If there is an imbalance, the system won’t work efficiently.

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