Apr 10 2009

9 Questions to Ask a Drop Shipper

So you’ve found the perfect product — or products — to start selling. You’ve got a solid marketing plan, a good grasp on your target consumer, and a professional, user-friendly interface that gives you an edge over the competition. But wait — how are you going to store and ship all of that inventory?

For many savvy online sellers, the answer is simple: “I’m not.”

Even if you’re new to the eCommerce game, we probably don’t need to sell you on the benefits of drop-shipping. Having the manufacturer ship the product directly from their facility to the customer makes a whole lot of sense, especially if you plan to sell oversized or bulky items, products with multiple options, or a diverse array of merchandise. You won’t have to come up with upfront payments for inventory, and you’ll also avoid paying potentially significant fees for warehousing and distribution.

Choosing drop-shipping as a fulfillment method may seem like a no-brainer, but selecting a dependable, accountable vendor requires some foresight. Below are some critical questions to ask a prospective drop-shipper before signing on the dotted line:

1. Are they reputable?

Find out how long the shipper has been in business, how many clients they have, and the average length of their client relationships. You should also check with the Better Business Bureau to make sure there haven’t been complaints filed against them.

2. Is their process automated?

In today’s high-tech age, most legitimate drop-shippers are set up to receive all orders electronically through a secure web-based program like VendorNet. This ensures an accurate record of order details, shipping costs, and delivery statuses. If a drop-shipper isn’t up to speed with the latest technologies, move on to one that is. Manual processes are simply too subject to errors, lost orders, and shipping snafus, all of which can cost you customers.
Stock updates should also be automated. As the drop-shipper’s inventory becomes depleted, that information should be transmitted to you via a data feed, either nightly or in real-time, to dynamically update the product availability that displays on your site.

3. What’s their typical lead time?

Obviously, the sooner the better. This time frame will be posted on your website, so accuracy is important. The longer a customer is made to wait, the greater the chances they’ll get frustrated and cancel their order. Also make sure the drop-shipper offers the ability to monitor shipments by tracking number.

4. How do they handle returns?

A client-focused vendor should make it easy for customers to return items for a refund or exchange. Any applicable credits should be processed quickly back to the customer’s account.

5. Will they be accountable for problems?

Many vendors may promise to help resolve potential shipping issues, but then don’t deliver. Ask for specific examples of problems that have arisen and how the company has dealt with them. You want a shipping service that will be proactive about tackling issues and won’t pass the buck back to you.

6. Do they send automated confirmations?

Instant confirmations have become industry standard for both orders and shipments; if a customer fails to receive one, they’re liable to call your Customer Service department wondering if their order made it. Your drop-shipper should offer electronic notification upon receipt of order and release of shipment.

7. Do they print customized packing slips?

When a customer receives an order from the drop-shipper, the package should be branded with your business name, logo, contact information, item up-sells, and other company-specific items. Most legitimate drop-shippers can print packing slips dynamically from the web. Order summary reports should also be included with shipments.

8. Do they have a minimum quantity restriction?

The answer to this should be no. You should have the freedom to process orders for as few or as many units as you need, from 1 to 100. It’s wise to start out slow with a few small pilot orders to get a feel for how the drop-shipper’s process works. Once you do ramp up to larger orders, many vendors offer volume discounts.

9. Do they charge you to set up an account?

Again, you’re looking for a “no” answer. A reputable vendor should not require a fee to make purchases from their inventory. Invoices should only be issued as products are shipped to your customers.

Navigating the drop-shipping waters can be difficult, and there’s a lot of “hit or miss” – typically they either know how to do it and do it well, or they don’t. As an additional tip, I’d also recommend looking at the customer feedback from other merchants that sell those products – like bizrate.com, epinions.com, etc. Because in all likelihood, if another merchant is selling those products, they are also being drop-shipped for that merchant, and the service and reliability of that manufacturer is reflected in the reviews of the merchant.

Blue Acorn

5 Comments

Carla
Apr 20 2009

These are really good questions. All of the people I use for drop shipping are small business so communication is pretty easy with them. They are never more than a quick email or phone call away.

Reply
Fotoconnection
Apr 30 2009

Here at fotoconnection we’ve long ago decided not to drop ship. Its tough to find a company that answers yes to all the questions above. We would not be able to afford a negative review or comment posted onliine because of the negligence of some other company. Stocking all that you sell is the best bet if you have the capital and the space.

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Kathy
May 23 2009

Great post. One of the biggest reasons my former company died was that it forged a relationship with an unreliable drop shipper. These are great questions to ask. Just make sure you believe their answers!

Reply
Jackie
Sep 14 2009

These are great questions! I have also bookmarked this! thanks!

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