Drop-Shipping Challenges and Solutions
Drop-shipping is a useful type of e-commerce fulfillment service where the retailer (you) purchases products and sends them to customers in response to orders—without using a standing inventory. Since you don’t have to maintain inventory stores, drop-shipping margins are usually higher than other methods. However, businesses that use drop-shipping will also face certain challenges that other types of fulfillment services do not readily encounter. Here are two of the more common challenges that drop-shipping can face, as well as the most apt solutions.
Many challenges with drop-shipping arise in some fashion due to the lack of control you have over the vendor or manufacturer. This can create disconnects in information and make it hard to give customers the visibility on their order that they might want or expect. Solving this challenge, therefore, involves fostering communications between you and the supplier.
Get Clear Lead Times and Availability
Customers will appreciate being told upfront what their expected delivery time might be. In order to provide this information, you need accurate lead times and product availability data from your vendors. Devising systems that can collect this information and update delivery estimates and availability based on these inventory feeds can help inform customers at the point of purchase.
Your order management system has a large role in keeping you informed of what is going on with your vendors. Ideally, you will be able to get vendors to confirm purchase orders and verify your estimated delivery dates. This information can then be put into your own systems and shared with the customer.
It is imperative that a part of your drop-shipping procedures is to track and follow up on any orders that become late. Contact your vendor and find out what the status is and the new delivery estimate. You also need to contact the customer as soon as possible since they will know when the order is late and some proactive action on your part can go a long way to retaining their good will.
Since your engagement with the customer effectively ends once they make the purchase, it can be tricky to establish a clear branding image when using drop-shipping. This is an issue since branding your order fulfillment services helps build repeat customers. Without strong branding, you limit your ability to stick in your customer’s mind even if the service itself is excellent. Fortunately, there are ways to overcome this challenge.
Including marketing inserts in your shipments, such as catalogues, brochures, coupons, etc., can help reinforce your brand while offering a sort of call-to-action towards future business. Another approach is to include something fun that can express your brand’s personality and put a smile on a customer’s face. What that “something fun” might be, of course, is up to you, but one example might be seasonal cards or holiday wishes.
If your vendor allows it, arrange for custom elements in your packaging. This can include things like labels and package tape bearing your logo or even offering your own custom-printed packaging materials. At minimum, you should be able to include a branded packing slip that contains your logo, contact information, and shipping policies.
Taking the time to follow up with your customer can help offer a more personal interaction with your brand. A follow-up can be in the form of a survey, courtesy call or e-mail, thank-you note, or other method you consider appropriate. In addition to possibly garnering useful feedback, follow-ups help keep your brand at the forefront of the customer’s mind and make you stand out better against competitors.
Look to Lean Supply Solutions for Drop-Shipping Success
Lean Supply Solutions is a third-party logistics (3PL) order fulfillment company in Toronto whose operations are based around the Lean Methodology, a proven philosophy focused on eliminating any operations, equipment, or resources that are not capable of adding value to clients’ supply chains. By striving to ensure that the right products are provided to the right customers at the right time, Lean Supply Solutions is able to offer consistent, accurate, and quality results.
To learn more about the Lean Methodology, outsourcing to Lean Supply Solutions, or to ask any questions, give us a call at 905-482-2590.