Dropshipping - Pitfalls and advice?

[DavidAH82]

Hi everyone,

We are looking to move a well established craft teaching business online to offer tutorials, but also to partner with a local craft supplies wholesaler to offer tools and supplies to the public via our website.

The supplier has no online presence and is not interested in creating one, but they are likely to be happy fulfilling orders from individual customers that we take and forward onto them as this only requires a small change in layout in their warehouse. I believe this would be described as 'dropshipping'.

We have never done this before and the neither has the supplier so I would be interested to hear any tips and advice for starting out with this kind of relationship and if there any common pitfalls we need to look out for?

Is dropshipping the best way forward or do other users suggest any other solutions to explore?

Thanks in advance for any help, it is very much appreciated!

- David.

 

[JJWinst]

Hi David,

Dropshipping is a good, inexpensive way of selling products. The major plus is not having to hold stock.

There are a couple of negatives though; Will your 'drop shipper' uphold the same standards as yourselves? (Quick dispatch times/secure packaging etc)

Make sure you know their stock levels and shipping rates/times before anything else.

 

[DavidAH82]

Thanks JJ,

Good points. They are an established and reputable wholesaler I suppose rather than 'dropshipper' as such, but the way our relationship would work would likely be more like a dropshipping relationship (i.e. they don't have an e-commerce site and don't want the hassle of setting one up, but, hopefully, are happy to fulfil orders we take for them via our site).

We have a relationship with them already and we are basically looking to replicate that online. Hopefully it will work out.

Cheers,

David.

 

[wayzgoose]

Stock levels will always be the problem. With an established dropship company you are likely to get a feed or receive emails whenever an item goes out of stock. With a company that just agrees to dropship for you without having an infrastructure in place is always going to be a nail-biting experience !

 

[alexjamesbrown]

The biggest issue I had in the past with dropshipping was being competitive -
You will not be exclusive to the dropshipper in almost every case - You're essentially competing with the dropshippers other customers

 

[DavidAH82]

Stock levels will always be the problem. With an established dropship company you are likely to get a feed or receive emails whenever an item goes out of stock. With a company that just agrees to dropship for you without having an infrastructure in place is always going to be a nail-biting experience !

Very good point, reliable stock information would be key to this set up.

 

[JJWinst]

I would also test how the process works, Will there be an order system in place or will you simply send through the information on an email etc.. See how long it takes and how smooth the process is.

Can the drop shipper handle the amount of orders you expect to receive, and as someone mentioned, ensure you aren't selling stock that isn't available. You will always take the hit and not them.

 

[Jason L]

Hi David

I would echo some of the points above and also add that communication with the drop shipper is crucial. When things go smoothly it can work well, but if for example an item doesn’t turn up with your customer, you will have to provide customer service without necessarily knowing exactly when the item was sent, with what service (e.g. Royal Mail, another provider) etc. Also, it's worth stressing that the customer has a contract with you, not your drop shipper.

It may be good to test the water with drop shipping, then move to holding stock and fulfilling your self (of course, this brings fun issues of its own though – warehousing, excess stock, negotiating a decent rate for mailing etc!)

 

[Clodbuster]

Hi David,
We essentially operate exactly as you are describing and have done so for soon to be 10 years. As they deliver to other retailers (we are the only drop shipper as we have mutual exclusive arrangement - we cannot sell other companies product and they cannot drop ship for another outlet) who then supply the market both through a shop or online, stock is the biggest problem. I have no way of knowing what is out of stock until I send an order in.
Everything else runs pretty smoothly, we get to hear of new lines first, if they get a direct query the contact is passed to us

 

[DavidAH82]

Hi David,
We essentially operate exactly as you are describing and have done so for soon to be 10 years. As they deliver to other retailers (we are the only drop shipper as we have mutual exclusive arrangement - we cannot sell other companies product and they cannot drop ship for another outlet) who then supply the market both through a shop or online, stock is the biggest problem. I have no way of knowing what is out of stock until I send an order in.
Everything else runs pretty smoothly, we get to hear of new lines first, if they get a direct query the contact is passed to us

Hi Clodbuster,

thanks for your reply, and congratulations on the upcoming 10 year anniversary!

When you first set out with drop shipping relationship with the wholesaler did they have to make any major changes to their packing/despatch process or was this a relatively easy change for them to achieve? Did they have any concerns at the beginning that you were able to overcome?

We are meeting our wholesaler later this week and have met with web designers already. Many of my concerns about the IT side of things has subsided since chatting to the web designers, so now it is down to whether we can work out a process that the wholesaler is happy with.

Fingers crossed they are keen to proceed!

- David

 

[japancool]

How will you manage returns?

 

[wayzgoose]

How will you manage returns?

I've always found the easiest way, when dealing with a company that does not officially dropship, is to keep them in stock and re-sell. (Unless they are faulty).

 

[japancool]

I've always found the easiest way, when dealing with a company that does not officially dropship, is to keep them in stock and re-sell. (Unless they are faulty).

Sorry, I was unclear - I meant what would happen in the event of a return, would the customer return it to the OP?

But you bring up a good point, what would happen in the event of an order cancellation? Also, what about non-delivery or damages in transit? Who would take responsibility and shoulder the cost?

 

[wayzgoose]

All questions to be sorted before using the service. I would think it depends on the type of goods being supplied.

 

[Clodbuster]

Hi Clodbuster,

thanks for your reply, and congratulations on the upcoming 10 year anniversary! Thank You.

When you first set out with drop shipping relationship with the wholesaler did they have to make any major changes to their packing/despatch process or was this a relatively easy change for them to achieve? Did they have any concerns at the beginning that you were able to overcome?

- David

I was perhaps in a unique situation as I have had over 30 years contact with the manufacturer. We did not change any packaging as they have been in the business for 60+ years and I market their trademarks and reputation. Only the delivery note enclosed with the consignment was changed and I have to supply them with A4 headed notepaper of my design suitable for their system. That was the only alteration.

Sorry, I was unclear - I meant what would happen in the event of a return, would the customer return it to the OP? In my case returns come to me and are to my account, I sell those thru Ebay or if I happen to get a suitable order I'll supply from here. I get no more than 5 returned orders per year so not a headache. Fault returns are handled by them under their warranty scheme at no cost to me bar minor admin cost.

But you bring up a good point, what would happen in the event of an order cancellation? Also, what about non-delivery or damages in transit? Who would take responsibility and shoulder the cost? These are covered by the parent company as they have the contract with the courier and have to deal with them direct.

 

[DavidAH82]

Hi all, just thought I would post again to let you know progress seeing as you all offered good advice.

We had a great meeting with our wholesaler and it is all systems go! Still need to iron out the details and issues raised in this forum, but glad to say we are moving forward.

Thanks again!