At nChannel, we often speak about the importance of connecting your channel applications, from your eCommerce sites and point of sale (POS) solutions to your ERP and accounting systems. With a web-based solution, data is seamlessly transferred between these systems, not only saving you time, but offering you accuracy, visibility, and reliability too.
However, a multi-channel environment can also include “inventory locations” – locations, suppliers or entities that are strategic to fulfilling orders. One such inventory location could be a drop shipper.
Why Should a Company Consider Drop Ship Strategies?
Drop shipping is a sales and inventory strategy in which a business does not actually keep items in stock. Instead, the retailer or merchant sends its sales orders to a wholesaler or manufacturer, who fulfills the orders and ships the products off to the customers as well. Using drop ship strategies can help you offer more products to your target market of customers without the expense of purchase or holding inventory. You send orders to your drop ship supplier, they ship it, and invoice you for your services. Your job is to ensure your customers get their product in a timely manner, that the order is correct, and that you are charged correctly.
Communicating orders, order status and shipping can be accomplished in any number of ways – some of which are highly efficient – others, not so much.
Drop Ship Management & Integration with eCommerce & POS Systems
Just like we evangelize linking your channel applications together to mange your multi-channel operations, you need to “link” to drop ship suppliers you use to avoid a few of the pitfalls retailers fall in to using drop ship strategies.
Set up a system to get organized for drop ship
One way to communicate orders to a drop shipper (and this is how most merchants do it) is to send an email order. If you deploy this method, you better find a way to keep track of it. You may need to call your supplier or ask for an email acknowledgement to ensure they received the order. You may need to schedule a calendar entry by a certain date if you have not received an email notice that your drop ship supplier has shipped the order. And if you have employees, you’ll need to create a process so they can manage this process in your absence. You’ll also need to a system to locate orders, track status, create POs in accounting, send shipment details back to the customers and so on. Finally, you’ll need to ensure you can get your hands on the order quickly in case a customer calls. You won’t have time to be sifting through stacks of paper or multiple software applications.
You’re Making a Promise…
Despite the fact that your not holding inventory, it is still your companys responsibility to the customer to provide accurate inventory availability and descriptions/images on your site. Without a good system in place, you may end up selling items that your supplier doesn’t have in stock or no longer available.
Your biggest concern needs to be the satisfaction of your customers, and dealing with out-of-stock products and misleading information is not something that will result in returning visitors. By deploying a drop ship management solution, you can connect your POS or e eCommerce system to your drop ship supplier, alleviating many of these issues.
- Your orders can be automatically sent to your supplier, reducing errors in manual entry and faster communication with your supplier
- In many cases, a drop ship management system can automatically create a payable in your accounting system further reducing order entry
- When your supplier acknowledges the order, your eCommerce or POS system can update the order status so you have the most immediate information at hand
- When the order is shipped you can append the shipping details automatically to the order, which can set the order status to shipped. Often the native functionality of your eCommerce system can take care of notifying your customer with shipping information.
- Finally, you may be able to receive the invoice electronically from your supplier, which you can match against the original order or PO in accounting – ensuring that you were charged were correctly.
Do Your Research
Make sure to do your research when it comes to finding a drop shipping supplier. After all, this is a partnership in which the drop shipper will be handling some important duties, such as packing and shipping the appropriate products to your customers. In many cases they are extending your brand – using your name in packing slips and labels. You want to make sure that when your customers receive their orders, that it looks like it came from you. Be sure you know how your orders will arrive.
Unfortunately, there are thousands of drop shippers to choose from. Some are very reputable, others are not. While we can’t help you select drop shippers, we can help you streamline the drop ship management process. Using the cloud and the systems you’ve already invested in, with the right drop ship management solution, you may find that you are able to sell more product faster, reduce inventory cost, reduce manual entry time – and even expand sales into other complimentary markets.