To Drop Ship or Not to Drop Ship? That is the Question (to ask Your Suppliers)

For retailers, meeting customer demand no longer relies on how much free space is in your back room. Online shopping has helped retailers open up…

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James Hawden

June 11, 20123 minute read

drop ship

For retailers, meeting customer demand no longer relies on how much free space is in your back room. Online shopping has helped retailers open up their channels and satisfy even the pickiest of consumers. Now, you can carry the most popular products as well as those that may only appeal to 1 or 2 consumers. Great, right? Well, it can be.

Loyal customers can now shop their favorite brand online, and in many cases right from a customized phone app. And, thanks to new go-to-market channels, they have access to more styles, colors and sizes than ever before. Customers can order from the website, by phone, through an app or in the store and send products sent to their home, the store or split in packages of four.

The choices are endless and so are the potential headaches. The idea of drop ship/direct-to-consumer means shifting fulfillment to your suppliers. You most likely have a process for enabling your vendor community when it comes to the brick-and-mortar channel, but when you’re trying to mitigate the madness of cross-channel, which suppliers can you trust? What should you expect and of whom should you expect it?

Implementing cross-channel purchase order support makes for complicated supplier lifecycle management. More trading partners will be involved, the enablement process for direct-to-consumer programs will differ slightly and overall order volume will increase. But, none of that matters to your customers. They just want their stuff delivered when and where they want it. Thankfully, technology is available to help ease the process. However, rather than simply relying on technology and, often times, a new and separate merchandising team, retailers need to establish clear expectations for their suppliers across the various channels.

Will the products be purchased by the retailer similarly to their store inventories, and then either housed at a distribution center or fulfillment center for shipping to consumers? Will the retailer engage in a direct-to-consumer model with their suppliers, opting only to take “ownership” of the inventory after it has been purchased by the consumer?

Understanding the expectations of the buyer and the capabilities of the supplier is extremely important. Trading partners need to clearly establish which products are intended for which channels. For drop-ship or retailer fulfillment, suppliers need to be able to meet consumer-level, not store-level, requirements:

  • Custom Branding: Many retailers want their branding on everything from labels to packing slips on shipped items. Some suppliers can mimic your brand and make sure customers aren’t left wondering why their exclusive high-end product was labeled from Jumbo Jim’s Warehouse, while others can’t. If this is important to you, make sure to ask.
  • Delivery timeframes and service level commitments: Critical to a consumer-driven marketplace, as a retailer you need to know when items will arrive. Everyone has different time frames to which they can commit. Having an up-front commitment for overnight vs. three day shipping is the difference between a happy customer and one without the green glitter wedges they want for their big event.
  • Specialized Packaging: Sometimes customers want packages wrapped up with a little bow… literally. Can the supplier handle special requests such as gift wrapping, customized boxes or whatever crazy request may come? Determining limitations up front keeps everything on track.

While some suppliers excel at drop-ship, for many others it is a steep learning curve.

Ask these questions to make sure your supplier drops the product into the consumer’s hands, instead of dropping the ball due to miscommunicated expectations.

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