The Hidden “Hard Costs” Of E-Commerce Orders

The Hidden “Hard Costs” Of E-Commerce Orders

All online retailers account for the typical costs of working with distribution centers or drop-shippers – cost of goods, computingshipping costs, etcetera. Similarly, all site owners are very much aware of the expenses they have to undergo to get a shopper to click the “purchase” button on their carts.

But what about hidden costs – those that are between the purchase of a good or product and the actual fulfillment of the order?

For most e-commerce sites, these costs and others are often overlooked despite their importance in managing an order’s lifecycle – they are real costs that considerably affect your ability to scale and your margins.

Every Time Orders Are Entered Into Your Cart, Make Sure That You Do The Following Things….

1. Double-check the stock keeping units inside your inventory file. If it is out of stock, the notify the customer and issue a backorder or refund.

2. Route the order. Select the most appropriate distribution vendor – fulfillment center, drop-shipper, etcetera. – to fulfill orders. Manually enter information into a flat file or spreadsheet in their preferred layout then send them an FTP or email.

3. Update inventory. When you receive information on shipped orders from your vendor, update your shopping cart’s inventory by copying and pasting the tracking number in your shopping cart and marking it as “shipped”.

4. Communicate with your customers. Send your customers emails telling them that their product has been shipped.

What is All This Cost?

Let us assume you are paying someone – or even yourself – $19 /hour to handle this task. Information we have gathered from customers suggest that each manually-processed order can take twelve to fifteen minutes to complete.

PASS THE BUCK

That is over $4/order not on shipping or marketing expenses, but just on managing the order’s lifecycle.

As such, if you are doing over 1,000 orders each month, that is up to $4,000 or 250 man hours every month.

The lifecycle process of an order is complex enough with one vendor and one online storefront. However, when using multiple distribution vendors and five marketplaces, these processes do not scale, but the costs do.

Automating the order lifecycle – order routing, shipment tracking, and inventory management processes – can significantly reduce your labor costs and the time you spend managing these tasks. Systems are updated, and orders routed in near real time saving you valuable money and time that you can reinvest elsewhere in your business. At the same time, the right automation platform will make it easier for you to scale as you move forward, streamlining the addition of new distribution vendors and storefronts into your supply chain’s ecosystem.

Tricks To Find The Best Drop Shippers

Tricks To Find The Best Drop Shippers

Starting up an online business? Then it’s time to start reading about e-commerce. Here you’ll find out what does and doesn’t work. You’ll learn about drop shipping and the ins and outs of it. You’ll find out that you can use drop shipping in lieu of a physical inventory and you can save tons of money in this fashion. You’ll also find out how to save your money and use it more wisely. Let’s focus on what we need to learn.

searchingUp until now, you know that you must have a supplier to use when drop shipping. Etailers, as they are called, rely upon a drop shipper to fulfill their orders. Many questions regarding drop shipping go like this: “Can I find a drop shipper that I can rely on”? Let’s explore this question and more.

Drop Shipping And Fulfillment

It can be a monumental task to find a good drop shipper. Many of them have suppliers and count on them as the cornerstone of the company. If you’re using drop shipping you’ll want to choose one that is solid and you can rely on. Otherwise, you won’t be in business for long and you may find that you’re losing your good customers.

Hub logic is a great company to boost your business. They combine experience with knowledge and can help you to be more successful.

Get It Together

Before you find your, supplier, you’ll want to ensure that you have taken care of a few things. You’ll need to be able to show proof that you’re an actual retailer. Otherwise, a drop shipper won’t work with you. You can check with your local city regulations to see what you’ll need to run your own personal drop shipping company. In most cases it is as simple as a business license and a few dollars to get yourself going.

You can apply for your EIN number as well and then you’ll be all set to buy wholesale and use drop shipping. It’s not a difficult thing to obtain and you’ll be well on your way to making money in your business.

Be sure that you have an EIN number at the ready. You’ll also need to have a resale certificate to show. With these in hand, you can then move forward to your drop shipping business.

Be familiar with the verbiage of drop shipping. You need to know what is drop shipping. You’ll need to know their common practices as well. Check out the general advice section and follow the helpful links at the bottom to ensure that you understand and comprehend what is going on. You’ll want to know how to avoid illegitimate suppliers and seek out legitimate suppliers that you can rely upon. Read everything that you can find on drop shipping and keep learning as you go. The more you know, the more likely you are to be successful at drop shipping.

1. Know The Industry

Various industries have various supply chains. Knowing where your company is going to fit into the picture will go far in helping you to find the right supplier. Be sure that you follow up and find out all of these important details before you begin. Small details can make a huge difference.

Example: If you’re in charge of a small boutique selling specialized items, you’re not going to have any success with larger distributors, you’ll want something that is smaller and more direct. You’ll be needing something that is unique in order to be successful.

2. Consider Manufacturers

Determine who makes the items you’re considering selling. Call the manufacturers directly and see if they are willing to drop ship for you. In some cases, they will be happy to do so. It’s better to call than to email as emails can readily get lost. Work with a smaller niche and you’ll be more successful.

There are usually three categories of vendors:

Drop shippers: They drop ship and you’re going to be happy.

Nondrop shippers: They don’t drop ship and likely you’ll be unhappy.

Resellers: Those that resell or don’t. If you find those that don’t, you’re not going to want to work with them. Move on to another.

Etailers with larger inventories will often use the direct contact for drop shipping. This is a wise move and will work well if you do your homework. They also offer great prices. They will have great leads on other manufacturers and can help you find more to add to your inventory.

3. Old Fashioned

Most suppliers don’t use SEO practices. The sites are time traveled and look like they’re right out of the 90s. Sometimes, it pays to be old fashioned. See how this works for you.

old store

Newsletters and trade magazines may be valuable resources. They usually have ads from various suppliers and people like you. Check out the websites and peruse their resources to see what they have to offer. You may find great options here.

Drop shipping groups are ideal for learning even more. You can also find forums and online groups that go over various ways to use drop shipping to your advantage. Once you get the basics you can add from there and will learn even more. Keep an open mind and don’t be afraid to branch out.

Lastly, look at trade shows and see what they have to offer. Consider conferences and expanding your niche to learn even more. Talk with reps and suppliers and seek to follow up on what your options are. Don’t be afraid to step out and try something new.

4. Finding And Working With Reliable Drop Shippers

Reliable online suppliers are hard to find. Finding one is a frustrating and time-consuming process and for every reliable wholesale you might find, there are several with horrible terms, those that are scams, and two or three that are non-existent.

Nevertheless, you can use some simple methods to better your chances of finding good and trustworthy vendors on the Internet.

First, it is advisable that you be aware of the fact that most of the suppliers, even those who seem decent, have a weak online presence. As such, your research should go a bit deeper if you want to find the best candidate. In short, don’t be quick to settle on what you get in the first five pages in the search results. Jump to page 11, 12, 13, and onwards. The goal is to fish out different identifiers that will ensure you cover every possible base.

Your online search for products or vendors should be based on keywords such as “reseller”, “wholesale”, “manufacturer”, “distributor”, “dropship”, “fulfillment”, and “e-commerce”. Moreover, you can as well use specific phrases such as become a reseller, or retailer wanted.

Alternatively, your search can be based on location, which requires the input of a physical address to find vendors near you. Google provides a search feature that allows for country based searches. For instance, if you are looking for vendors or products on sites in China, just add “site: .cn” to the search.

Avoid ruling out vendors that have dated web pages; most suppliers on the Internet are never too keen on developing a good online experience. The primary object should be taking note of their contact page to see if they have accurate and updated information. Also, getting in touch with them is an important move especially if you feel that they are worth partnering with. Furthermore, be keen to find online reviews and testimonials that talk about the suppliers and what they offer.

A simple online search can give you results that have one or more vendors that look slick and with a notably attractive website appearing on the first page of the search results. However, opting to skip the first few pages can reveal vendors who may have better terms and prices than those in the first two or four pages. Furthermore, the possibility of other parties also searching for the same thing opting to work with the suppliers listed in the first pages is high. Thus, you stand to have less competition in terms of pricing offers.

5. Try What’s Left

At this point, your search results should have given you several possible option of potential vendors. However, if you are not successful and you still need more options, then you can consider leveraging the following resources.

You can choose to use online listings that charge an access fee. Keep in mind that some of the listed entries may be outdated or obsolete. Hence, exercise caution when relying on the information listed, just be sure that you work with updated information.

Lastly, to find vendors online particularly those in China, you can use sites such as Alibaba, which can help you make a list of drop shippers for specific products. It is an option that works for some people. However, it does have some drawbacks. For instance, the quality of the goods may be questionable, and it is hard to settle issues that may arise with the shipping or products, an issue that your customers’ will hold you liable for.

Alibaba

The best approach is minimizing on the risk factors; as such, you should consider starting out small. For instance, do not make a huge order or opt to do a wire transfer for your first payment. Strive to build some trust, a trust that they should earn because some Chinese suppliers are known to requesting for payments and never delivering the purchased goods. In regards to payments, it would be safer to work with vendors who accept PayPal or other secure forms of payment platforms. Most importantly, test and review the international drop shippers before you start doing any business.

Wrapping It Up And Shipping It Out

At this stage, you should have a list of potential vendors or have a solid idea on where to start your search for suppliers. Drop shipping is a growing and very promising industry as is evidenced by the increasing number of new and established retailers who are taking advantage of drop shipping in their different e-commerce fields.

The Background and History of Drop Shipping and Its Relevance to the Commerce of Today

The Background and History of Drop Shipping and Its Relevance to the Commerce of Today

drop shipping

You may have heard of drop Shipping, but you might wonder what it means. Just who is using it in today’s world of e-commerce world and how does it work? It would be useful to go back a few years and discover how the practice of drop shipping has come about.

A TRADITIONAL MODEL OF E-COMMERCE

Just a few years ago, say 10 to 15 years, it took plenty of capital to open a retail store. For example you would need capital in order to:

– Purchase your inventory from a supplier in bulk
– You would need physical warehouse space in order to store your inventory
– You would need a physical storefront where you could sell your inventory to the inventor to the public, either from an online basis, or a physical store that would be located somewhere

Then you would need even more capital to be used for marketing. Such expenses as radio and television, newspaper ads and fliers would typically be the normal channels of advertising that would be used, and this could become quite expensive. There would always be the risk of having to spend lots of money on inventory, and yet, if it didn’t sell right away, there was always the possibility of spoilage, outmoded inventory, and financial loss. This model has been the main model of retail selling for many years, even with the risks involved.

IT IS MUCH EASIER AND LESS RISKY TODAY TO START A RETAIL STORE ONLINE

The trend nowadays is to start an online store using very sophisticated venues such as Shopify and Magento. An online store can be started online and maintained for as little as $20 to $30 per month which eliminates the need for the expense of maintaining a brick and mortar physical store.

Magento

It is no longer any barrier at all to set up your store in terms of cost or logistics, as the online stores are very simple to start. You are still in the same predicament however, as you will have to supply an inventory for your online store. It is also a fact that most online retailers don’t have the resources as do larger retailers and box stores, so they must look to other means in order to be able to supply their customers with their needs.

DROP SHIPPING ENTERS THE SCENE AND BECOMES THE IDEAL FULFILLMENT PROCESS

So, what is drop shipping? The way that it works is to have the customer buy the product from your online store, but instead of you buying and stocking the product, the order is sent to the manufacturer / drop shipper who agrees to ship the product directly to the customer. The payment is made to you, and you are simply invoiced for the lesser cost of the wholesale amount, keeping the profit for yourself.

One very popular method of stocking your own inventory with a fulfillment processor is to use Amazon, the king of retail fulfillment. The process is already set in place and is called “Fulfillment By Amazon” and you will be taking advantage of the world’s premier shipper. You simply send the merchandise to Amazon and they take care of the rest when your product sells.

Or, you may wish to make arrangements with several drop shipping manufactures and sell your merchandise through your own online store, such as Shopify and have the manufacturer ship the merchandise. Either way, these are two models that are currently working for lots of people.

Shopify_Logo

The process of drop shipping is not exactly a new idea, as it has been used for many years. It really is the best of both worlds, as you have the vast reaches of the Internet to use for your marketing, and you then have a tried and true distribution system which is the drop shipped products that come directly from the manufacturer. Companies such as Zappos and Wayfair have built their entire businesses around drop shipping very successfully for a number of years.

THE FUTURE OF E-COMMERCE IS BEING SHAPED BY DROP SHIPPING

Drop shipping is really taking hold of the e-commerce industry because it is the ideal solution for ease of operation of the entire retail process. You select your product line to suit the needs of your customers and price your items accordingly. You need not stock any products, but only have them shipped from the warehouse of the manufacturer when the products are ordered.