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Drop-shipping is a potential with challenges for modern e-commerce

Monday, November 24th, 2014 by Servage

Drop-ShippingThe method of drop-shipping has existed for decades and has grown to massive proportions with the rise of numerous online stores. It is actually quite simple in theory: You are the seller of goods and focus purely on marketing, sales and customer service. Whenever you receive an order, you get your drop-shipping supplier to send the product straight from his warehouse right to the customer. You never touch the product. You just sell it.

What are the benefits of drop-shipping

  • No need to maintain inventory, which reduces the investment requirement to startup and fund an online store.
  • Outsourced packaging, shipping and returns since this is done by the service provider which gives you time to focus on marketing, sales and customer service.
  • Speedy delivery to customers because drop-shipping providers and shipping companies usually have swift work flows and a good collaboration.

This principle seems very attractive for startup entrepreneurs because the missing need to establish and maintain an own inventory – and getting rid of the packaging and shipping tasks – makes it easy to start an e-commerce web shop in theory. However, in reality there are quite a few caveats which make drop-shipping a great challenge, while also carrying great potential for the future success of an online store. Drop-shipping can be the difference that drives profit margins up high enough to be successful if greatly implemented, or when poorly implemented will be a contributing factor to some major problems. Therefore consider all aspects carefully before making a decision about what suits your needs the best. Take a look at the challenges below.

Catalog integration

If you are selling all products from a drop-shipping provider, you need to maintain a good integration with the provider’s product catalog. This is important to ensure attractive, precise and correct product information to your visitors. Having the right information at the right time and place will reduce workload resulting from questions regarding incorrect product details, or problems from orders of expired products.

Product availability information

One of the major frustrating experience for customers are problems during the order process. Therefore make sure your customers are being provided with correct availability information about the products they order, so they are not presented with annoying errors during order confirmation. Also ensure that the order work flow is quick and efficient with few steps.

Shipping & tracking information

The most frustrating experience for customers are problems due to delayed shipping. Usually the key to avoiding shipping-related frustration is all about managing expectations and sending the right information to customers in time. Therefore make sure that customers are properly informed about their shipping status and events related to the shipping. Send out messages like “Your order has been dispatched” including tracking options to follow the package on its journey with the shipping provider. This also eliminates a range of related inquiries from customers to your service department.

Speedy order handling

Make sure the integration between your online store platform and the drop-shipping provider facilitates speedy order handling. Customers expect swift deliveries, so any delay caused by inefficient work flows should really be avoided. The optimal system is therefore fully automated, so the only time waiting between submitting a successful order with payment and receiving the package, is the time used by the drop-shipping provider to pack and the shipping agent to send it.

References & More Reading

 

 

Drop-shipping is a potential with challenges for modern e-commerce, 4.7 out of 5 based on 3 ratings
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