Drop shipping is growing in the US, and many supply chain entities have taken notice. In order to compete with one another, manufacturers and wholesalers have made it a major goal to establish drop shipping programs of their own, enticing retailers at every turn to offer their products online.
This has been a clear trend over the past decade. The supply chain is changing, and there is no stopping the rising tide of e-commerce. Companies must adapt or fall by the wayside. Retailers know that brick-and-mortar stores are declining. The pathway towards future growth is in online sales, which are efficient, fast and easy for consumers to use.
Both big name retailers and small independent businesses are looking to partner with suppliers that offer drop shipping. Here’s how you can establish a program of your own.
As a drop shipping vendor, it is your obligation to make available a list of items that you will be able to supply for their marketplace. Different retailers, depending on their size and experience, will move at different speeds to implement this process. Your major duties are to:
- Assist retailers with setting up items on their e-commerce website (some use sites like Amazon while others have built their own).
- Provide sellers with an ongoing and updated list of available inventory.
- Receive, process and ship orders as they are made.
- Provide sellers with order and shipment information.
You won’t have contact with the consumers, and the items you pick, pack and ship will appear as if they came from the seller, not you.
Setting up fulfillment and shipping
Since you are in charge of shipping, it is up to you to plan and implement the logistics strategy. When prospecting fulfillment solutions for drop shipping programs, you have two major choices:
- Keep it in house
- Outsource to a third party logistics provider (3PL)
If you already work with a 3PL, you can bring them into the process and they will help you plan and execute your strategy.
The pros of keeping your drop shipping program in house are:
- Lower upfront costs
- Complete control over fulfillment and logistics processes.
The pros of outsourcing your drop shipping program are:
- No investments in IT resources, software, etc.
- Unlimited scalability: if your drop shipping program takes off, your 3PL will be able to keep up with the demand.
- Access to a huge range of reliable carriers.
- Strategy and implementation by a seasoned logistics company.
When implemented properly, drop shipping can become a large part of your business. You will be able to market and sell your products through dozens (or many more) of retailers that sell to consumers all over the world. The scalability is near unlimited. The challenge is being able to coordinate and fulfill orders coming in from multiple sources, all the while managing and keeping up with your freight supply to your regular retail or wholesale customers.
At King Solutions, we help suppliers manage their drop shipping networks, fulfilling orders for customers all over the world. To start a drop shipping program that can scale quickly, contact us today.