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Retail Ecommerce Drop Shipping Explained.

There are many different methods that companies can choose from when it comes to order fulfillment. Sometimes businesses will opt to perform all the tasks associated with it themselves, including hiring and training personnel, investing in warehouse space, purchasing capital equipment, and other required elements. While this approach can give a company ultimate control over each and every aspect of their order fulfillment process, it can be extremely costly in terms of overhead and management resources required to do it effectively.

Some companies may choose to perform a select few of the order fulfillment tasks internally, and contract out other parts of the process to third-party logistics service providers. Unfortunately, this often has the unforeseen effect of complicating the supply chain process by introducing a higher likelihood of errors or inconsistency with each company that’s involved in the order fulfillment process. Naturally, these situations can produce customer satisfaction problems along with increased costs, both in the short term, and in the long term.

There is another solution, one that companies can choose that will simplify the order fulfillment processes, lower overhead costs, improve consistency, and ultimately improve customer satisfaction. This method of managing the order fulfillment process, while at the same time streamlining the supply chain is to of course utilize drop shipping services provided by a reputable and trusted logistics organization. Third-party drop shipping services, such as those available from SCI, help eliminate upfront inventory requirements, as well as reduce investments required in personnel and other capital expenses that other order fulfillment methods require.

The drop shipping model is actually very simple, and it has the added benefit of improving the consistency of shipping and delivery for your customers, allowing you greater predictability in order fulfillment from start to finish.

Ecommerce Drop Shipping Consists of the Following Steps:

Drop shipping explained

 The Drop Shipping Process

As far as the customer is concerned, there is a seamless experience as they navigate your ecommerce website and place their order. These orders are then communicated automatically with the drop shipping provider, who then manages the inventory and warehousing of your products for you.

The drop shipper picks, packs, and ships your customers orders for you, notifying the customer of the shipping status directly through your own website and their customer account.

The order is then delivered directly to your customers, complete with packaging and invoicing that reflects your business and brand, completing the experience from end to end.

Benefits of Drop Shipping

Drop shippers specialize in managing all kinds of inventory, big and small, including new products as well as providing service and support products for those companies that choose to provide service, replacement parts or accessories in the same manner as their main product offerings.

By managing every aspect of the order fulfillment process, drop shippers are able to provide shorter turnaround times and reduce the delay between order placement and receipt of the product by the customer. For companies that deal with very high volumes of product shipments, this added time savings can have a huge impact on the bottom line.

The benefits to customer satisfaction rates cannot be understated. Drop shipping your products can help you ensure that your customers receive your products promptly and consistently, with appropriate packaging and handling processes to reduce the likelihood of costly problems with shipment loss or product damage.

Concerns with Ecommerce Drop Shipping

While drop shipping does have many advantages, there are some aspects that might cause drop shipping to be an unsuitable choice for your business. For example, whenever you allow a third-party company to handle such a critical part of your business, there is the potential for a change in brand experience for your customers. This disruption, if not managed carefully and precisely, could have a negative impact on your brand if the customers do not adapt well to the new method of order fulfillment.

Drop shipping should also be approached with caution by businesses with very low margins on their products, especially those in extremely competitive, commodity-type product categories. If the cost savings from reduced overhead are not enough to offset the new costs of drop shipping, and your margins are already very thin, then this is likely not the best choice for your company. Yes, there are many other benefits, but they will all need to be carefully measured and weighed in total in order to determine the best course of action for your company.

More Advantages to Drop Shipping

If drop shipping does seem to be a sensible choice for your business, you should be aware that drop shipping also allows new businesses or product lines to achieve faster startup times and enable a quicker return on investment by getting products in the hands of their customers in far less time than other order fulfillment models. For companies that are expanding in to new markets or locations, this quick startup time is of great benefit, as they do not need to worry about leasing additional space or hiring and training new personnel for the new locations they wish to serve. The drop shipper handles everything for them, regardless of their market locations.

Scaling your business through peal seasonal demands, including the Christmas holidays, Black Friday & Cyber-Monday, Back to School and other periods, can also be achieved by utilizing drop shipping services. Logistics service providers will have substantial resources at their disposal including warehousing space and personnel resources to handle any increase in product volume that your company may experience throughout the year, including seasonal or promotional event surges.

The added peace of mind gained by utilizing drop shipping helps your business focus on maximizing the business benefits of those surges without having to worry about your ability to fulfill customer expectations.

Next Steps

If your company currently struggles with shipping issues, or you are looking to start up a new product line or serve a new market, drop shipping may be the solution to simplify your supply chain and help you achieve your goals.

SCI is ready to help answer any questions you may have about drop shipping, or any other supply chain and logistics services that might help improve your efficiency and profitability.

Contact us today and speak with one of our supply chain and drop shipping specialists – let’s see how SCI can help your business.

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