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Effortless Drop Shipment: A Seven-Step Program for E-Commerce Success

By Contributing Author | 02/23/2018 | 6:03 AM

By Peter Edlund,  DiCentral

The habits of today’s consumer have shifted rapidly over the last ten years. The long days of shopping at malls or placing orders inside a retail store seem obsolete, even during peak shopping seasons like Black Friday weekend. Today’s consumers expect to be able to order almost anything online and have it shipped immediately.

As a result of this new paradigm, retail e-commerce has ballooned while traditional brick-and-mortar stores have been failing to grow. E-commerce is a $220 billion market and is expected to grow by as much as 17 percent each year, according to AmeriCommerce. Retailers are keenly aware that, in order to survive in today’s retail reality, they need to partner with more suppliers to support direct-to-consumer fulfillment—or drop shipping.

Nonetheless, many retailers still struggle with drop shipment, with concerns ranging from difficulties in forecasting and return on investment to supply chain visibility and control of the customer experience. Getting every step of the drop ship process right is critical because, when a customer shops on your website, you will ultimately be judged for how accurately and timely a dropship vendor handles a transaction.

Your reputation and your connection with customers are on the line with every transaction, even if you never touched the package that arrives at someone’s door. The last thing you want is to hear is a complaint from an angry customer that hasn’t received an item from a dropship vendor. That conversation usually means there won’t be any repeat business.

Drop shipment doesn’t need to be complicated or problematic. There is a seven-step process you can follow that begins long before a package is ever shipped from a supplier’s warehouse. We’ve outlined the steps below, beginning with knowing you might need some help.

Step 1: Use A Complete Dropship Solution

Retailers have plenty to worry about before things like e-commerce and drop shipment are even considered. Before you get started, it’s best to consider a third-party dropship solution. Most retailers were not built to handle direct-to-consumer fulfillment and the volume of single SKU order fulfillment that comes with it. One thing you don’t want to do is shirk on customer service or the core tenets of your business.

A better solution is an end-to-end dropship solution that ensures control over the direct-to-consumer order fulfillment process. You also might want to seek a complete outsourced solution that provides the visibility and tools to manage both your bulk fulfillment and direct-to-consumer order fulfillment processes.

Step 2. Set Expectations With Vendors:

Before you get to the nuts and bolts of online sales, you need to have frank conversations with your vendors. Be explicit about your requirements and timelines and specific dropship requirements, such as scheduled inventory updates and private-label packing slips.

Step 3: Ensure Product Information Is Accurate:

The best dropship programs start with accurate product information, everything from price to weight to product images. Make sure you add e-commerce extended attributes for the product catalog to your Vendor Standards Manual to receive all the information necessary to populate your e-commerce website.

Step 4:  Integrate Available Inventory in Real Time

Accurate inventory is essential if you plan to take orders from e-commerce customers and have them fulfilled by a dropship vendor. Most retailers should plan to update inventory multiple times daily. Also, consider how third-party providers can assist vendors with maintaining and communicating inventory so it’s available for your website.

Step Five: Understand The Critical Dropship KPIs

So, you have a dropship solution, you’ve talked to your vendors and you have accurate product information on your website. Great! You’re almost there. The next step is to look at the KPIs (key performance indicators).

First, make sure vendors send inventory feeds per their SLA (service level agreement) to give you an up-to-date view of what’s available. Second, create a reporting dashboard using transaction data to see how fast the vendors confirmed an order and ensure that the acknowledgement came within a mandated time frame. Also, add order fulfillment to your reporting dashboard to see how quickly an order went out the door and if the vendor shipped an item within the agreed upon timeframe. Third, make sure the vendor’s order fill rate is within acceptable range. Finally, seamless order-to-small-parcel-shipment tracking to invoice documentation should be standard throughout the dropship process.

Step 6: Rigorous Shipment Standards

Errors are a given with the high volume of e-commerce, particularly during peak times, such as the holiday season. However,customers now have full visibility into the shipping process. Keep consumers updated on the status by integrating small-parcel-carrier package shipment tracking. Take shipment documents from your vendor, grab the carrier tracking number and update your e-commerce website with up-to-date shipping information.

Step 7: Follow Up:

Having real-time dashboards, a score-carding program, and a comprehensive view of shared inventory will ensure your trading partners are fulfilling orders as promised. You want a view of available inventory at a vendor site that is comparable to your view of internal inventory to minimize customer service issues or lost sales opportunities.

Peter Edlund
Peter Edlund | Senior Vice President of Global Product Marketing 
Peter is a founding member of DiCentral and responsible for leading the company's global marketing initiatives. He is the host of DiCentral's Connected, a video podcast that discusses current EDI trends with leading supply chain experts. Peter has over 20 years of sales and marketing management experience with a focus on supply chain solutions. He has held executive management positions with several technology firms. Peter is a veteran of the U.S. Navy and attended Central Texas College and Embry Riddle Aeronautical University where he studied aviation business management. For more information, please visit www.dicentral.com.

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