May 23, 2016      3 min read

Drop shipping is a novel logistics strategy for beginner entrepreneurs, SMEs with limited capital and larger companies alike. Drop shipping separates the retailer’s sales and marketing functions at and before the point of sale from the logistics functions that follow, meaning that a retailer can trade without a single item of inventory. Although companies that employ drop shipping do not have warehouses or fulfill orders, from the point of view of the consumer, they continue to be responsible for ensuring the follow-through of customer orders. Here are three key reasons why, despite not holding any stock, companies that use drop shipping should consider investing in a top class inventory management platform.

Reduce the Administrative Burden

For most, drop shipping appeals to businesses as it means they can run lean, potentially reducing the initial and ongoing financial commitment required. Drop shipping also has the potential to be lean in terms of time invested, but this depends on how efficiently you use your time and the working hours of any staff you have. As well, menial tasks, such as updating inventory in your eCommerce platform as supplier inventories change can be automated with a quality inventory management system. Cloud-based platforms especially can be beneficial, as they tend to integrate well with supplier systems. Whether you choose to drop ship for lifestyle freedom or for an increased income, you and your business will benefit from concentrating your time on strategic rather than administrative tasks.

Ensure the Accuracy of Your Online Sales Channels

Especially as a smaller retailer, creating a reputation for correctly fulfilling customer orders is crucial to developing a base of loyal, repeat customers. This means ensuring that purchasers receive the right products in the right quantities, colors and specifications. Some companies who use drop shipping manually refresh the stock levels in their eCommerce platforms when suppliers update their inventory data. However, manually updating quantities against each SKU from a spreadsheet or CSV file is not only menial – it also means that the availability of stock on your website will inevitably vary from what’s in your supplier’s warehouses. A good inventory management system will be able to integrate with supplier systems, preventing you from missing sales by either understating stock availability or by overestimating the amount of stock remaining and being unable to deliver.

Keep Your Customers in the Loop

Because a range of partners may fulfill a large customer order, manually keeping track of fulfillment can be difficult. A simple request for an update on a customer’s order can take up valuable time, as the retailer has to contact a number of different suppliers to learn the status of each individual part of the order. Moreover, customers who purchase goods online typically consider being able to instantly resolve straightforward queries to be an essential part of the customer experience. By integrating Unleashed’s inventory management software with your eCommerce platform, you can create an automated process for dealing with routine customer queries and have confidence that you’re as informed as possible when untangling more complex problems.

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