In our last blog series, we provided a step-by-step look at the hurdles retailers must overcome to implement a successful drop ship program.
Next, we’ll flip things around and look at the main factors suppliers manage while handling drop shipments for more retailers. While there are some similarities, there are considerable differences, such as the difficulties of inventory management for drop ship.
Here are the key challenges the suppliers face as they look to expand e-commerce revenue, along with tried-and-true solutions:
- Juggling Multiple Retailer Requirements
When you add new retail clients, you need to work within their bulk and direct-to-consumer parameters. Not every retailer has the same processes, expectations or transaction documents. Remember, you will need to ship to multiple customers on behalf of multiple retailers while maintaining stringent standards for each shipment.
When possible, meet in advance with each of your customers’ e-commerce or omnichannel director to understand the necessary trading partner documents as well as special considerations unique to their organizations. Second, prepare to scale the complexity associated with the service level requirements of multiple retailers.
Be advised, if you don’t understand the requirements before you get started, you’ll risk violation of dropship business rules, which ultimately result in chargebacks or lost sales.
- Inventory Management
Retailers process orders on a minute-to-minute basis and expect orders to ship rapidly or even on the same day. As you look to expand your e-commerce enterprise, first make sure you and your retail customers have a transparent scope of your inventory before the orders come in. You need to accurately assess how much you have in stock and inform your retailers to update their corresponding inventory levels accordingly. Inventory visibility to your retailers is the key component of maximizing sales opportunities.
A plan must be created to manage inventory trends, such as seasonal demands or popular items. You’ll need a scalable, robust multi-channel inventory management system to guarantee consistent management.
- Scale Smartly
When a new retailer agrees to stock your merchandise, it’s tempting to make your entire catalog available immediately. Instead, slowly ramp up available SKUs over time. If you list everything at once you will quickly be disorganized and overwhelmed. Furthermore, if you introduce inferior or lesser popular items first, you run the risk of making a poor impression with your new retail customers.
If you start with a few products or categories, you’ll be more successful with processing them accurately and efficiently. But you need to be sure you can deliver them in an accurate and timely fashion. Without automation, it’s likely that the manual processes will cause customer service issues with quality control and on-time delivery.
- Integrate Your ERP
If you don’t fully integrate supply chain data into your ERP (enterprise resource planning) systems, and rely on manual processes instead, you run the risk of data entry levels, which in turn, can lead to additional issues.
Creating a direct integration between your ERP and trading partner data (EDI and/or dropship) will allow the systems to automatically handle the data formatting, error checking and data transformation so that the data is seamlessly transferred from one system to the other.
Continuing with manual processes is problematic and can lead to the constant threat of errors resulting in chargebacks.
In our next article, we’ll explore how suppliers can set up a drop ship program once they’re prepared for their eCommerce launch.
In the meantime, take a deep dive in our Report: The State of Drop Shipping Compliance.