How to Master Being a Drop Ship Vendor - Part I - The Challenge
January 21, 2021
We're amid the rise of the digital economy. And consumer buying habits are changing. They've been changing for years now. The COVID-19 pandemic has only expedited the speed at which importers and distributors adjust to these new habits.
More now than ever, consumers want the product they want instantaneously. And if you can't get them the product they want by the time they want it, they'll just go someplace else.
A recent McKinsey report found that more than 75% of customers tried new brands and places to shop during the pandemic—and buyers said that product availability was the primary reason why.
An all-in-one consumer goods ERP can help you stay on track and on schedule—ensuring your products are available when your consumers want them. It's a tool that supports seamless communication between business partners, warehouse efficiencies, product tracking, and real-time access to inventory levels.
Without this tool, the challenges of successfully drop-shipping product to consumers are ever-present.
It's important to recognize that you may be experiencing some challenges associated with drop-shipping product. Particularly as it relates to:
- Changing consumer buying habits
- Real-time information exchange
- Managing shipments efficiently
- Streamlining processes
Let's break down these drop-shipping challenges a bit further.
Changing consumer buying habits
The prominent contributor here is the rise of the digital economy. Online shopping has simplified the buyer's journey—it's easy to click a button and have product delivered nearly immediately. This is huge. It means that price is no longer the only competitive advantage for companies—offering a short lead time is.
COVID has amplified the online shopping marketplace. There's an entirely new demographic of people who are buying online—in addition to all those folks who were regular ecommerce participants.
Because consumer habits are changing, and changing so quickly, it's hard to forecast accurately. To keep the right inventory. To keep up with increased demand.
Real-time information exchange
One of the single greatest threats to a successful consumer goods business is manual data entry. Your data is outdated the second it's written down. It changes that frequently.
Manually keying your orders, tracking information, updated inventory levels or updated ecommerce product information into a single system or between multiple systems is a seriously labor-intensive, time-consuming process.
If you're operating this way, a human must be involved at every step of the process: to input the data, to receive it, and then to place it in some designated place. It's costly, prone to mistakes and presents another challenge: scaling up.
If you were to double your volume, for example, and you were operating with manual processes, you must increase your staff to accommodate those orders. It's inefficient and costly.
You also run the serious risk of data inaccuracy. It could be a simple case of miss-keying information. Regardless of why—it's still inaccurate. And it's eventually going to cause downstream issues.
Because the data is entered manually and dependent on humans, there are going to be inevitable delays. This is particularly true in terms of advancing orders, getting information into the right systems and getting product out the door. And when one of the largest competitive advantages is speed, every minute counts.
Managing shipments efficiently
So much of this comes down to the warehouse. To smooth, quick processes. To automation. To real-time visibility.
If you're looking to get shipments out the door efficiently, several things must happen:
- Reduce the time it takes to pull product and pack each order.
- Bulk pull all the product you need instead of walking the same aisles over and over.
- Avoid using multiple systems to produce labels and paperwork.
- Have product properly slotted.
- Enable your operators with hand-held devices.
- Automate data entry.
So much of mastering drop-shipping comes down to streamlining processes.
This includes everything from demand planning to credit card automation to everything in between.
If you can forecast accurately, if you can plan the inventory you need and when, you're well on your way to mastering drop shipping.
If you’re selling to consumers with your own B2C storefront, you also want to be able to process credit card transactions quickly and efficiently—either during the order or afterward. The process by which your customers pay invoices should be as easy as possible. You want to get paid—that's the goal of any business, right? Please don't make it challenging for your customer to pay you.
There should be processes for picking, packing and labeling. For printing shipment labels. For communicating with customers. For ensuring on-time, in-full (OTIF) delivery. For everything associated with running your business effectively and profitably.
These challenges are very real. And if unaddressed, it presents a very serious threat to consumer goods businesses. And the great news is we have a solution—a consumer goods ERP.
Aptean ERP software helps manage your business' data, employees and workflow—making your operations more efficient and helping you grow your organization. We want to support your success—and ensure it for the long haul.
This is part one of a two-part series on the ins-and-outs of being a drop-ship vendor. In the second blog, we explore the tools you need to overcome all these drop-shipping challenges and successfully get your products in your customers' hands.
We're here to help you get ready for what's next, now.