Dropshipping has become a very popular eCommerce fulfillment strategy. Why? Because it alleviates the risk of having to pay for and hold products until they sell, enabling you to concentrate on marketing your store rather than fulfillment logistics.Overall meaning you lower running and operating costs.
But dropshipping is not without its own frustrations. The biggest of these challenges, which most dropshippers face today is managing multiple suppliers. Having multiple suppliers means coordinating inventory and order data logistics to ensure that you and your online store are always in-line with your supplies.
It’s not all doom and gloom! With the right practices and tools in place, dropshippers are able to navigate this more efficiently. The three tricks to streamlining and managing a multiple dropship supplier business are:
- Choosing the right product suppliers
- Putting systems in place so that you are prepared for the out-of-stock situations
- Having the right tools to manage important things such as SKU differentiation and data management like a pro
In today’s post, we will share dropship supply management best practices on how you can effectively manage multiple dropship suppliers in two steps. Steps which will help streamline your dropship business and alleviate the risk to your profit and to your online store brand name when managing multiple dropship suppliers.
Step 1: Setting Up Your Multiple Dropship Supplier Business
The first step is to use preventative measures so that you can be ready for any availability issues you may encounter, thus ensuring you can quickly and easily adjust with minimal business impact.
1. Vet Your Suppliers
By properly vetting your suppliers before you decide to ‘stock’ the item, you will alleviate a lot of the possible availability issues. The ideal scenario would be to have a main supplier and then to pre-vet backup suppliers so that you always have a plan B.
Before you pick a supplier or a product, do your homework — speak to your supplier or potential supplier’s sales rep about projected availability and fulfillment timelines. When choosing backup suppliers make sure that the product alternative replacements are almost identical so that they can be easily switched in if needed.
Find suppliers who offer an array of products allowing you to limit the number of suppliers you need, rather than having one supplier for each product you are selling. This will make the whole management process a lot easier for you and eliminate instances where there may be product overlapping.
Some top tips on what to look for in a good dropship supplier include:
- Go for supplies with an average positive feedback of 95% and over. This will help you weed out suppliers whose fulfillment process could be detrimental to your business management.
- Make sure your supplier is responsive to ensure that if issues do arise, you know you can easily communicate with your supplier.
- Try to find suppliers who have a similar return policy, ensuring that you are able to give your customers one uniform return policy on your site. Just like this successful dropshipper: Soaestheticshop.com.
Ensure that your store is prepared for changes. In the case where a substitute product can be interchanged, ensure that your descriptions of that product are generic enough to enable you to meet the order from your usual supplier or your backup supplier.
2. Set Up Customer Communication Channels
One of the most important things you can do when managing a dropshipping business is ensuring your communication with customers is open. Having a reliable customer service setup that provides support in any situation is the key to a successful business. Good customer support can turn a delay or frustration into a lifetime customer, whereby bad customer service can turn a small delay into a review nightmare or a lost customer.
How? Let me give you an example. Recently I tried to buy something from a big brand store and unfortunately, the purchase would not go through and there was no error on the page to tell me why they wouldn’t take my money. I emailed their support to find out what was happening and was told that I would get a response within 24 hours. Twenty-four hours came and went. In fact, it took them three days to get back to me, which in eCommerce terms is a lifetime, and by then I had already bought from their competitors.
Now I didn’t have a problem waiting 24 hours for support, as I knew this is what they provided. But when those 24 hours turned into three days, they had lost my sale and the possibly many purchases I would have made. Having good support is particularly important for sellers who are dropshipping from multiple suppliers, where chances of things ‘going wrong’ are higher.
Facebook messenger has become a great customer support and service tool. By utilizing chatbots, you can ensure you get more customer requests quicker, without losing that personal touch. Here are Entrepreneurs Using ChatBots Without Coding guide to get you started.
Step 2: Managing Your Multiple Dropship Supplier Business
There are two main concerns – or managing-headaches if you will – when managing multiple suppliers, these include SKU differentiation, data synchronization, and supplier changes.
1. Dropshipping SKU Differentiation
SKU’s allow us to quickly identify a stock item based on its size, color, manufacturer etc. Each and every product you sell, regardless of whether you are a dropshipper or not, needs to have its own unique SKU. One of the biggest, and easiest, mistakes you can make when managing multiple dropship suppliers is in SKU management.
This is because your supplies are the ones who hold the inventory and therefore they are the ones who manage the SKU numbers.
To avoid chaos and financial losses for getting it wrong, you will want to ensure that each product, by each supplier has its own SKU; even when you have two suppliers supplying you with exactly the same product. This differentiation will ensure that you can easily identify your supplier for that product and that that product order is being sent to the right supplier.
What’s the fix? A simple solution is to use the supplier name as a prefix. For example, say wholesalers Ben and Jerry sell the same type of notebook and both products have the same SKU: SKU356. By simply adding the initials of the supplier’s name you can ensure that SKU is unique for your online store business like so:
Ben’s Notebook: BNSKU356
Jerry’s Notebook: JBSKU356
Why is this important? Because having unique SKUs in place is vital for a dropshipper with a variety of suppliers as this enables you to set up automatic routing and ensure that orders are being fulfilled by the right suppliers.
2. Dropshipping Data Synchronization
It is not just SKU data you need to coordinate as an online seller, it is also inventory levels, availability, prices, and order status. As your online business grows, so will your product list, the number of orders and the number of dropship suppliers. You won’t be able to manage this successfully without the right tools to manage and synchronize your data.
This is actually the case for those sellers who are not only using multiple suppliers but are also selling on multiple platforms. Without software or tools, such as our Product Data Management Platform to assist, growing your business will not be logistically possible. Automation is the only way to go.
You need to have one dashboard where you can manage and synchronize your SKU, pricing and availability changes across all your channels or you will be stuck in a big administrative loop that will leave you too little time to actually market your store.
Managing multiple dropship suppliers can seem like a logistical nightmare, so if a supplier is causing more hassle than it’s worth then it is time to drop them. For the consumer, the ordering process is a reflection on you as a seller and can affect your brand impression and therefore your sales. Having suppliers with poor communication and repetitive availability problems, even if they are offering you the best price, is harming your earning capabilities in the long run.
Again if you’re using online platforms such as StoreAutomator, you can easily make the adjustments to price etc., across all your sales channels, ensuring minimal disruption to your online business.