So when we think about the “concept” of drop ship, it seems like a win-win situation.  Suppliers can focus on manufacturing and shipping; likewise, retailers, etailers and other businesses can focus on sales and customer service.  Product is not picked, packed and shipped twice, inventory levels are resident at one location rather than several; and the end customer can benefit from a more competitive price due to overhead reduction. 

Thinking about it even more, drop ship could also be used to introduce new products to an organization’s offerings.  The risk of carrying inventory if the product does not perform well is alleviated.  For suppliers, it allows the ability to potentially gain additional business from an organization by proving their product is a winner.

This sounds like a winning opportunity – no inventory, no shipping labor, and no overhead….too good to be true?  Upon discussing this with other professionals who practice this model, it is not the silver lining!  But you already knew this as if it weren’t my article wouldn’t exist!

One mistake organizations make is not recognizing that though they don’t have physical inventory, they will still need practice item management.  And when you start mulling over the details of item management the 800 pound gorilla appears in the room.

Part of item management is retaining your company branding of the item through the process – from item order to item delivery to item return.  Company branding is important.  Keeping third parties transparent to your customer involves much planning and partnering with your suppliers.

Identifying what physical evidence will be shipped with the item by your suppliers that could brand it instead of you is a good first step.  Labels?  Pack lists? Packaging? Cartons?   Those organizations successful in the drop ship model partner with their suppliers to assure all branding reflects them.  Sound easy?   Managing supplier relationships and assuring they are adhering to your brand processes is about equivalent to half of the 800 pound gorilla.

When we place an order with our supplier is when the other half of the gorilla comes out. Easy enough, but is it?  Tracking an item order from start to finish is a daunting but necessary evil to assure a first class customer experience.  But due to the drop ship model, visibility into inventory and item status becomes invisible. 

Organizations should take a methodological approach to assure they are touching the life of the item through the process.  This approach will involve transactions to follow inventory, changes in order status, ship date, tracking information and delivery information, to name a few.   Any question your customer might ask needs to be accounted for in a transaction, or one will need to build a large customer service organization to field not only customer calls, but also for calls made to suppliers to check on status.   This will not occur without the true partnering of suppliers once again.  You are no longer asking them to just pick, pack and ship.  You are asking them to communicate each step of the way.

There is still a portion of the gorilla left in the room that is the difference from being a drop ship organization or not.   Careful consideration needs to be made to assure if a drop ship model is used, it is developed with the utmost of methodological planning.  I can assure you through the discussions I have had, this model did not appear overnight and start working.   If it really were that easy, wouldn’t we all be successful millionaires by now?