Your website is the customer portal for your dropshipping business. Here’s how to make sure it works flawlessly.
Over the past few years, a new business model has begun to dominate the ecommerce industry: dropshipping. Billed as a revolutionary new way to do business, dropshipping has opened the online market to visionary entrepreneurs ready to launch a great new product on a shoestring budget, as well as a slew of get-rich-quick dreamers who don’t realize what they’re signing up for.
Dropshipping businesses are usually run by people who have a great vision but don’t want to manage the logistics of executing it. They want to be the front of the house people, with their focus on presentation and customer engagement, while supply and distribution happen behind the scenes.
There’s no shame in this. At its best, dropshipping allows every party to play to their strengths. And for a business trying to get up and running quickly, it has a lot of significant benefits:
- No manufacturing startup costs. Most dropshippers work with a network of suppliers who handle the actual manufacturing of their product.
- No inventory management. The product is produced and stored by the supplier, whose responsibility it is to track inventory.
- No shipping and fulfillment management. Products are shipped directly from the warehouse.
In other words, you effectively outsource the entire production and fulfillment part of your business. This is obviously a huge expense, but one that comes with some efficiencies, because your suppliers can take advantage of economies of scale. They can dropship your business from the same warehouse as a dozen others, saving on property costs, staffing, and equipment.
However, for all this to work, you need a centralized place where your store, your customers, and your suppliers all link together. That place is your ecommerce store. Here are all the connections you need to make to run your business.
1. Your online inventory still needs to match what your suppliers have in stock.
The first place ecommerce stores can run into trouble is with inventory management. You need to make sure that when a customer places an order in your store, the order not only goes to your dropshipper, it also updates their inventory so that you’re not selling products that have already been sold to other customers.
Fortunately, your dropshipper will be using inventory management software to keep track of this. You can hook that API up to your website so that the numbers in the inventory reflect what is available. When a product gets low or runs out, your store can update automatically.
2. Your website needs to connect with your dropshipper’s order management system.
When a customer places an order, that order needs to be sent to the supplier for fulfillment. At the same time, the customer needs to receive an email with an order number so that they know their order went through. Then, once the dropshipper fulfills the order, the customer needs to receive an email with a tracking code so they can follow its progress online.
This may seem complicated, but it’s standard practice, and your customers expect it. Fortunately, like the integration with the inventory software, your dropshipper will also have order management software. They might even be the same thing. With the API for the order management program tied to your website, you can automate every one of these processes.
3. Your website will be the hub for customer relations.
Your customers don’t know and don’t care where their products are coming from. So far as they are concerned, you are the entire business, and your website is how they contact you.
If something goes wrong with their order, they will come to you for answers. If they want to look up the shipping number again, you will be their first stop. If they want to cancel or make an update, they will want to sign into your website to do so. And if they want to leave a review of your product, your website is where they will go.
This means you have to have user accounts that connect customers with their order history, and that order history has to be tied in with dropshipper’s order management API. In case you haven’t caught on, the devil is in the details.
4. You will still need to set shipping costs and collect sales tax.
Dropshippers may be the ones putting your orders into a box, slapping on a shipping label, and loading them into a truck, but you’re the ones who will be collecting shipping and sales taxes on the website.
As we covered in our previous post about ecommerce shipping, online businesses have only been required to collect sales tax since 2018. Fortunately, there are several apps that can streamline this process for you so that you can stay above the law.
5. You will need to have a returns policy—and dropshipping will make that more difficult.
Possibly the biggest disadvantage of dropshipping comes in processing returns. Because inventory management is out of your hands, it is up to your dropshipper to make sure returns can be processed and restocked correctly. And because this comes with its own costs, they may charge you restocking fees to compensate.
Ecommerece businesses have dealt with this problem in various ways. I had one company tell me to keep the product I ordered AND they sent me a replacement free of charge. I loved them for it and continue to be a loyal customer.
I had another company mistakenly send me a product and then refuse to cover the shipping costs when I tried to return it. Remembering this incident still fills me the burning rage of a thousand suns.
The bottom line for all ecommerce returns, though, is that you must have a policy. It has to be on your website, visible, and written in clear language. A good returns company can even win you business, as in my example above.
Let us connect the dots.
If organizing your dropshipping business feels like herding cats, you wouldn’t be alone. While running a dropshipping business may streamline some aspects of your business plan, it still leaves you with a lot to manage, from quality control, to branding, to customer relations.
Fortunately, your website isn’t just your storefront—it’s also the nexus where every part of your business intersects. And making sure every node stays online is what we do best.
If you’d like to learn more about our ecommerce services, we recommend downloading our ecommerce guide and reading more about our work. Or, if you’d like to talk to us directly about the needs you have for your business, get in touch! We can schedule a needs discovery meeting with you, listen to your project, and give you more information about how we can help.