Shipping & Fulfillment

Tips for Improving Drop Shipping and Inventory Management

Autumn provides a not-so-subtle reminder that the holiday season is in swing. I recently moderated “Manage Inventory and Drop Shipping for the Holiday Rush,” a Practical eCommerce webinar, on this very subject. It featured Anne Pingree, senior sales engineer with Infopia, the hosted shopping cart platform; Andrew Ruppar, integrations manager at Inventory Source, providers of inventory management solutions; and Manish Jha, founder of Atandra, makers of order management software products. They all had sound, practical advice for merchants who want to improve drop shipping and inventory management processes before the holiday madness sets in. This article includes some highlights from the webinar.

Avoid Overselling

If you lack visibility into drop shippers’ inventory you may end up with customer orders that cannot be fulfilled. Some merchants simply cancel such orders, which irritates customers and often results in negative ratings. One way to avoid the backlash is to have multiple, redundant sources so if one supplier cannot fulfill an order another supplier can. While you’re at it, consider an inventory management system that helps you identify drop shippers, gives you visibility into drop shipper inventories, and helps ensure the data coming from suppliers is accurate.

If you’re warehousing products, it’s important to avoid stock outages. Effective marketing coupled with insufficient inventory or no inventory can be devastating to your reputation and your business.

To avoid overselling, it’s wise to centralize inventory management across all sales channels. If you warehouse inventory, also set up reports or alerts that will remind you to reorder additional product quantities.

Recognize All Drop Shippers are Not Alike

Drop shipping has become popular among businesses of all sizes, but finding drop shippers in the first place can be confusing if you haven’t done it before. You can search online or identify them through an inventory management service (and preferably one that has partnered with your platform provider). If you search online, be wary of businesses that promote themselves as “drop shippers only” because some of them may be middlemen that charge more for products. Worse, they may not be authorized distributors. If you want to find out if a distributor is authorized, ask the brand directly.

Successful Drop Shipping Depends on Details

If you’re drop shipping, you’re not selling products; you’re selling the accuracy and quality of information about products. Because product data often varies from one supplier to another, pay close attention to the details. Some may include irrelevant categories that should be excluded from your system such as a “catalog” category that refers to a paper catalog.

Data-related details can also be problematic. For example, different suppliers may have identical shop keeping units (SKUs) that refer to entirely different products, which can be a problem for businesses using multiple suppliers. If you’re bulk uploading identical SKUs from different sources, the data referring to one product may be overwritten and replaced with the data referring to another product. To solve the problem, you can simply add a prefix code to the identical SKUs prior to uploading the data, which also identifies individual suppliers.

It’s also important to understand whether data you’re getting from suppliers includes active items, all items, or just out-of-stock items. If the list is limited to active items the supplier may have removed inactive or out of stock items that are simply skipped when you refresh (re-import) the data. It’s also important to make sure that the supplier data and the format of the data is consistent because there may be errors related to UPC codes, weight (which can cause issues with free shipping), and other things.

To minimize such issues, evaluate suppliers’ data quality (e.g., quality of images, and product weight) before engaging them. A lot of merchants make the mistake of evaluating suppliers based price, customer service, or shipping policies when they also need to consider product data and how often the suppliers are updating that data. Even if it appears a supplier is providing good quality data, it’s important to review it each time before uploading it to ensure there are no missing values and that the data when transferred to your online store is appearing in the right place.

Assuming you have good data and your inventory management system supports rules, you can use the rules to push the product information out to the various marketplaces, such as Amazon and eBay.

Centralize and Integrate Order Management, Inventory Management, and Accounting

When orders come in, it’s important to make sure the items sold are subtracted from available inventory. Integrating and automating order and inventory management helps ensure that there are no disconnects between orders and available inventory.

If you run out of stock or are slow to ship products you may receive negative feedback on the various marketplaces. If there’s enough negative feedback you could be removed from a marketplace all together. Using a platform that ties together inventory management, order management, and accounting can help keep your ratings positive.

During the holidays order status calls tend to increase so it’s important to have customers’ order information readily available. By centralizing order management, it’s possible to automatically notify customers of their order status via email that reduces the number of order status calls and helps improve customer satisfaction.

Integrating QuickBooks or other accounting systems can save additional time and help reduce errors that can be caused by manual entries. Quite often, QuickBooks users import data from comma-separated value (CSV) files that may have become partially out-of-date because QuickBooks is not integrated with their ecommerce platforms. By integrating inventory management, order management, and QuickBooks together via an open platform, transaction processes can occur automatically end-to-end. Moreover, your business will benefit from up-to-date information about inventory, orders, revenue by sales channel and more.

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PEC Staff
PEC Staff
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