Dropshipping has become a viral 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, this means you lower running and operating costs. But dropshipping is not without its frustrations; the biggest of these challenges, which most dropshippers face today: is managing multiple dropship suppliers. Having various suppliers means coordinating inventory and order data logistics to ensure that you and your online store are consistently in line with your supplies.
It’s not all doom and gloom! With the proper practices and tools, dropshippers can navigate this more efficiently. The three tricks to streamlining and managing a multiple dropship supplier business are:
- Choosing the suitable product suppliers
- Putting systems in place so that you are prepared for the out-of-stock situations
- Having the right tools to manage essential 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. These steps will help streamline your dropship business and alleviate the risk to your profit and 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 to 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 leading supplier and then 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 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 with a similar return policy, ensuring that you can 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. If 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 to ensure your communication with customers is open. A reliable customer service setup that supports any situation is the key to a successful business. Good customer support can turn a delay or frustration into a lifetime customer, whereby lousy customer service can turn a slight 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. 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 was 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. Good support is significant for dropshipping sellers from multiple suppliers, where chances of things going wrong are higher.
Facebook Messenger has become excellent customer support and service tool. You can ensure you get more customer requests quicker by utilizing chatbots without losing that personal touch. Here are the Entrepreneurs Using ChatBots Without Coding guide to getting 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
SKUs allow us to quickly identify a stock item based on size, color, manufacturer, etc. Every product you sell, whether you are a dropshipper or not, must have its unique SKU. One of the biggest and easiest mistakes you can make when managing multiple dropship suppliers is 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 the same product. This differentiation will ensure that you can quickly identify your supplier for that product and that the order is sent to the correct supplier.
What’s the fix? A simple solution is to use the supplier name as a prefix. For example, say wholesalers Ben and Jerry’s 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.
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 the suitable suppliers are fulfilling orders.
2. Dropshipping Data Synchronization
It is not just SKU data you need to coordinate as an online seller but 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 the case for those sellers who are not only using multiple suppliers but are also selling on multiple platforms. Without software or tools like 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 significant administrative loop that will leave you too little time to 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, it is time to drop them. For the consumer, the ordering process reflects 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 adjust prices across all your sales channels, ensuring minimal disruption to your online business.