The early days of running an e-commerce business are all about getting your target customers interested enough that they’ll take a journey through your web site and product pages until they finally reach that “buy” button.
Everything that happens next will be key to determining how your company grows over the long term.
From the moment a customer initiates a purchase, for instance, they are making a vote of confidence that you’ll meet their expectations for the remainder of their experience.
Whether they can track the progress of their purchase.
Whether their purchase will arrive in a reasonable amount of time.
Whether their purchase will arrive as they ordered it.
Whether their purchase will arrive intact or damaged.
Whether they can easily reach out with questions or concerns at any point.
While running an e-commerce business often involves wearing many different hats — from product development to marketing and service — drop shipping is one way to let someone else wear a few of them on your behalf.
Though the exact details can vary depending on the third parties you work with, drop shipping is a way for e-commerce companies and startups to outsource much of the fulfillment stages of a customer experience.
You can use drop shipping partners to handle everything from producing the goods you sell to storing them, shipping them to a specific region and then handling the “last mile” delivery to each customer.
Given the increased use of digital channels for shopping and the business opportunity it represents, drop shipping can be a way to level the playing field and allow smaller players to act more like a large enterprise.
Instead of owning and operating their own warehouse, for example, drop shipping allows entrepreneurs to have hep managing their inventory. There’s no need to invest in a fleet of trucks and hire drivers, or to become an expert in shipping products to myriad different countries.
Drop shipping is a common tactic for e-commerce strategies where products are sold through large online marketplaces such as Amazon and Etsy. That’s not the only option, however.
As a seller of record, you can also form direct relationships with manufacturers who will do drop shipping as well as producing your wares. Then there are wholesalers, who might purchase your products, mark them up and drop ship them to other retailers.
Best of all, drop shipping may make it easier to focus on areas of the customer experience that require greater attention and creativity. This includes the brand image you’re trying to develop, the channels you use to tell stories about your products, and the time to address customer questions and complaints that come in through customer service.
If you’re seriously thinking about using drop shipping to launch and scale your e-commerce operation, make sure you thoroughly vet your partners. Some of the areas to consider and explore include:
Flexibility: Many drop shipping services have been developed with maximum efficiency in mind. That could mean there are limitations on how your products can be handled in terms of packaging or other aspects of fulfillment. As a result, you may want to think harder about how you’ll differentiate your brand in other areas.
Visibility: Even though you’re outsourcing as part of a drop shipping arrangement, your customers will consider you accountable for every step of the process. Talk to your drop shipping partner about the extent to which you’ll be able to see inventory levels and ensure customers don’t order something that’s out of stock.
Integration: The process of sharing data about customer orders should be seamless, and allow you to continue to optimize other aspects of the customer experience. Make sure you’ll be able to connect your CRM to whatever the drop shipping service has by way of a tech stack.
Promotions: Though no one wants to compete soley on price, e-commerce customers tend to respond well to special discounts and other offers. Before you can do that, though, make sure your drop shipping partners will allow you to extend free shipping for a limited time, or to put themed product bundles together.
QoS: If a product arrives broken or even with the package dented, it can detract from the experience and the perception of your brand. Discuss the drop shipping partner’s controls and safeguards to ensure quality is prioritized throughout the fulfillment process.
Safety: In light of recent events, many customers will be looking for contactless options when products are delivered to their doors. Your drop shipping partner should be well equipped with scanners or apps that remove the friction from signing off on a delivery.
Exchanges and returns: Like it or not, there will be items customers order via e-commerce that will need to come back. Ask about any costs you’ll incur as part of returns, how quickly exchanges can be handled and how best to connect all the relevant data to your customer service applications.
In some respects, drop shipping involves making trade-offs in the degree of control you have over areas like fulfillment and the speed at which you can grow your business.
If you have significant capital to work with, for instance, it may be better to create your own fulfillment operations so you can find ways to innovate in how customers receive their products.
You’ll also want to consider your goals in terms of profit margin. Products that are offered via drop shipping are often priced low in order to move larger volumes of orders. When you make good use of a CRM this becomes easier because you can begin to accurately forecast sales.
At the same time, using drop shipping at the outset could mean you develop a brand with unique attributes that set you apart in the market. Once you reach a certain level of growth, you may be more prepared to deal with the complexity of supply chain and inventory issues.
Just remember that customers are ultimately turning to e-commerce to enjoy a well-developed digital experience. You need to deliver, whether you opt for drop shipping or tackling fulfillment yourself.