I scanned the blogosphere and various Web sites for tips on choosing drop shippers and then managing those relationships. I found a lot of good info, and thought you all could use it as well.But for starters, let’s do a quick recap. Drop shipping involves a manufacturer or distributor fulfilling and shipping orders directly to the end customer. According to Wikipedia, “drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.”
There are real benefits – reduced inventory and associated expenses – that make drop shipping attractive. And even though retailers can mitigate the inherent risks of stockpiling inventory that may not sell, drop shipping can introduce new risks because there’s less control. Drop shippers operate in the back room, as it were. What’s visible to customers is the retailer, and the retailer’s service. So drop ship with care.
Here then, are some good tips:
- Research the drop shipper. Talk with current customers. This is a business relationship, after all.
- Smart negotiations are critical, and get things in writing. Points to cover and metrics to uncover during the contract phase include their rate of late shipments and mis-shipments, and how often the wrong product(s) has been shipped out. What quality controls measures regarding both the product itself, and the shipping services provided, do they employ? Do they ship overseas? How are returns handled?
- Establish fees up front. Some drop shippers charge a handling fee in addition to freight costs. Avoid companies that charge a participation fee.
- Investigate all the methods and services the drop shipper employs to ship products.
- Carefully consider the shipping packaging, and request changes if necessary. Also, require a packing slip that is branded with your company name, and request that no other material unrelated to your company or the product itself is included in the shipment.
- Conduct a test shipment to see how the process runs, and what shipment looks like when it arrives.
- Be a secret shopper, once you’ve signed them on. Periodically order one of the products that the drop shipper manages, and see how it goes.
- Check in with your customers regularly about their experiences.
There’s plenty more, but these are a good start. Most importantly, remember that every the service of every drop shipper you do business directly impacts, and reflects on, your company and your brand.