Your website is your storefront, dropshipping is your warehouse.. Here’s how we link them together.

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 and drastically lowered the start-up costs for new businesses. Nevertheless, for a dropshipping business to run effectively, the handoff between online orders and the backend supplier has to run seamlessly.

At its best, dropshipping allows every party to play to their strengths. The business owner manages the front of the house, focusing on business development, customer service, product development, branding, and marketing. Meanwhile, they partner with a dropshipping supplier who manages the logistics of storing product and fulfilling orders. For a business trying to get up and running quickly, it has a lot of significant benefits:

  • Low manufacturing startup costs. Business owners work with a network of suppliers who handle the 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.

Dropshipping still comes with a number of other expenses, but it also offers some gains in efficiency, because suppliers can take advantage of economies of scale by dropshipping adozen businesses from the same warehouse, saving on property costs, staffing, and equipment.

However, for all this to work, the business owner needs a centralized place where their store, customers, and suppliers all link together. That place is their ecommerce website.

We’ve managed this process for a number of clients, so when a new business comes to us with questions about how to integrate their ecommerce website with their dropshipping partner, we can walk them through the process. If you’re new to the process, here’s what you need to know.

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.

Any qualified dropshipper will be using inventory management software to keep track of this, and can provide an API or an ERP system, which we then hook 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.

We can help you create user accounts that connect your customers with their order history, which is in turn tied in with dropshipper’s order management API.

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 once ordered a product that didn’t work out for me, and when I went to exchange it the company told keep the product I ordered AND they sent the replacement free of charge. I had another company mistakenly send me a product and then refuse to cover the shipping costs when I tried to return it. You can guess which company retained my service.

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 policy 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.

Published 05/01/20 by Laura Lynch