Dropshipping Management Best Practices

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The advantages of employing the dropshipping model in ecommerce are well documented. However, success with it requires balancing the key elements between your organization and your vendors. Just as the decision to build your ecommerce store using a free website template can have a major impact on your bottom line, adhering to these dropshipping management best practices can help you maximize the potential of this strategy.

Drop Shipping

Effective Monitoring

While it sounds really simple at face value, the reality of dropshipping is quite complicated. A lot of moving parts must be carefully monitored. First and foremost, you’ll need a strict set of vendor guidelines to keep everyone operating with the same mindset. These should be documented in writing, so they can be easily referred to and disseminated readily among new hires. This will also make it easier to ensure the guidelines are being followed. You should also designate a single point of contact for dropshipping activities. That person is likely to need staff in larger operations.

Robust Inventory Control

Match your SKUs with vendor model numbers, Global Trade Identification Numbers (GTINs) and specifications right at the beginning of the relationship.Do this as part of your onboarding processes. Ideally, cost changes—if any— will be applied once annually. This makes it easier to keep track of items, such as determining quantity on hand to help you avoid promoting backordered products.Leveraging afree website template dedicated to ecommerce will usually get you this functionality automatically.

Automation is a Must

Trying to keep track of a healthy dropshipping business without automation is a recipe for failure. There’s just too much with which you’ll need to keep up. Most successful drop shippers already function this way, so make sure your system is capable of integrating with theirs fluidly and efficiently.

Provide Sales Forecasts

With drop shipping you won’t be able to just walk out into the warehouse to see how much inventory you have on hand. You’ll have to rely upon your vendors to have enough in stock to support any marketing initiative you implement. If you know you’re going to be doing very well with a particular product every July, make sure you get that information to your vendor in May so they’ll have time to stock up before your promotion takes off. Providing sales forecasts on a regular basis will help ensure your customers get their purchases with minimal delay.

Monitor Key Metrics

Evaluate the performance of your partners based upon fill rate, cancel rate, on-time delivery, and sales increases. Top performing partners should be rewarded, while low performing partners should be reconsidered. Place test orders with each of your shipping partners to gauge how customers perceive products when they’re received. Pay particular attention to turnaround time, delivery, presentation, errors, and customer service issue resolution.

Communicate Regularly

Quarterly meetings with vendors can help you address problems before they fully metastasize. Discuss upcoming campaigns so they can be prepared for order spikes. This is also the time to examine recurring customer service issues, cancellations, returns and backorders. Ask what you can do on your side to improve processes. The goal is to make sure you know what each other is doing so you can operate as cohesively as possible. You should also take advantage of these meetings to laud performance excellence.

These dropshipping management best practices will help ensure the transparency of the process for your customers. They will also safeguard the maintenance of healthy relationships between you and your vending partners.