Dropshipping is a business model that benefits from remote inventory. This is achieved by collaboration with suppliers that have all their products stocked in a warehouse. Although the order doesn’t ‘see’ the dropshipper, it doesn’t mean that dropshippers don’t have to take care of them.
The three most important elements of order management is having a product catalogue, processing orders and updating the inventory.
All of these are important for smooth communication and co-work with suppliers, making sure that every order is completed without any problems.
The issue with dropshipping order processing is in the nature of this order. In brick and mortar stores, the retailer orders products from the supplier, and afterwards the customer orders, or rather buys those products from the retailer. In dropshipping it goes differently. The customer orders first and the dropshipper orders from the supplier. Although most softwares are designed for the traditional type of ordering there is a way to automate it.
First you have to choose, and agree on the way in which you will request orders from your supplier. There are multiple ones:
Email – send an email with needed information to your supplier.
Email with an attachment – maybe a more organized way, especially when you have a lot of orders is to send and email with an attachment. The attachment should be a certain type of spreadsheet.
Over API/EDI – Web API is mostly used by high volume dropshippers. APIs are connected to commerce management software providing important information like order status, cancellations, returns etc. EDI is a bit older integration, but still very commonly used. It is practical for dropshippers that want suppliers to follow certain specifications.
Over the phone – sometimes suppliers will allow you to order over the phone. Have in mind that international phone call fees may apply.
Using suppliers portal – this is of course only available if your supplier has a portal for orders.
Despite some dropshippers choosing to manage their orders manually, they can be automated for email to save a lot of your valuable time. Automated orders work perfectly until there are some irregularities, but instead of managing everything manually, do that only for those orders that don’t get processed automatically.
To automate emails you just have to assign the supplier, or more precisely their email to your product, if you do have a few different suppliers for a single product you will have to rely on plug-ins. If you order by phone you can hire a virtual assistant and delegate that part of your job to someone else.
As aforementioned, although the inventory isn’t physically stocked by the dropshipper it does not mean that dropshippers don’t have to care about their inventory. You should be aware whether your product is in stock at your suppliers warehouse, as well as how much of it there is. This will allow you to not make empty purchases, selling something on your website which is not currently available. Also, knowing the exact number is also very important especially before some bigger shopping events like Black Friday.
Your online shop should be synced with suppliers inventory data via product data feed. Although it can come in many different formats it is mostly some kind of a spreadsheet with important data for you and your supplier. Be sure to agree on what data should the spreadsheet consist of (product identifier, quantity and price at least) and how often it should be updated.
This should include all the necessary information of all the products included in your shop. Some of the information to include is
- Product name
- Description (both one short and one detailed)
- SKU code
- Dimensions and weight
In conclusion, it is very important to have well organized inventory and easily manageable orders. This will also prevent any possible mistakes made in bad communication between you and your supplier.