Running a dropshipping business can be over whelming so I decided to come up with this new blog post on running a dropshipping business.
Before you begin or expand your existing dropshipping business there are a few things I want you to keep in mind –
- Things can sometimes get messy – Business don’t always run smooth, things tend to get messy when there are several parties involved. In case of dropshipping you can have situations like running out of order, fulfillment issues, defective item etc. If you accept this before hand, chances are you’ll be frustrated and more prepared to deal with situations.
- Adopt the KISS mentality – Have you heard of the term “Keep It Simple, Stupid”? The KISS mentality serves well when it comes to the dropshipping business model. Multiple suppliers, shipments, order fulfillment etc. can complicate things, instead, adopt or implement strategies that would help you do the basics – keep track of inventory and the basic cost of items at all times. Focus on doing things, getting items up or in front of your audience than wasting time making them “perfect”, because they ain’t going to be!
Now that we have these two important factors out of the way, let’s focus on what would be the right structure for your dropshipping business.
How to run a dropship business? What to do when your supplier screws up?
Let’s be real, suppliers screw up. Every great supplier makes mistakes, Amazon, Walmart, Bath & Beyond, you name it! Things get damaged during shipment, out of order, website not updated, took more time than expected to fulfill the order or wrong item sent out. It’s part and parcel or running a business. I’ve been there, but trust me when I say, it will all be A-Okay in the end. (Read my supplier’s screw up story here). But how you handle the situation will make all the difference.
- Own Up the Mistake – Never tell your customer how things got screwed up. It will just cause more issues and confusions and make you look like an amateur. The customer does not pay you to dropship the item to them; simply tell them that you are sorry for the mess up and you trying your best to fix it up.
- Make it up to Them – It’s always a good idea to make up to your customer when things go south. It can be in form of an add – on item or a discount coupon or providing an upgrade on the item they ordered.
- Ask your supplier to Fix It Up – Even though you took the fall for whatever your supplier did wrong, that doesn’t mean you have to pay for it as well. Ask your supplier to fix up the issue. Most good suppliers, own up to the mistakes they make and fix the errors; however, they would not pay for the extras you would send out to your customers. I had a supplier send out a wrong color chair once but he was very kind to offer free returns and exchange the item for the right color.
Note – If this keeps happening, you might want to consider changing your supplier.
How to Manage Inventory?
One of the biggest challenges I faced initially was managing the inventory from multiple suppliers, because it’s hard to manually keep a record in real time when operating a business from Australia. One of the easy ways I discovered was to sign up for websites like SkuGrid.com (affiliate link) or ChannelGrabber that would help you sync inventory in real time.
However, if you feel you not ready to invest in any software and want to continue doing it manually (I’m not going to judge you! I managed my inventory manually for 1yr) then here are a few things to keep in mind –
- Use multiple suppliers – Most items that you see at Walmart, will also be available at Amazon or Kmart or sometimes other retailers online. My point being, having multiple suppliers is an advantage as they sometimes have over-lapping inventories that would help you fulfill your order. If supplier A doesn’t have the item, chances are supplier B might. One of the methods that was successful for me was reverse searching the products using UPC codes. Simply type your product name at the UPC Lookup Database and it would give you a list of suppliers selling that product along with their individual prices.
- Pick your products wisely – Before listing any product, double check to see if there are other suppliers for back up.
- Use Generic Products – Always opt for generic products instead of branded ones. Two suppliers might have products that look identical but are from different brands. This would help you fulfill orders from either one of them.
- Check on stocks regularly – If you decide to manually monitor the inventory, it’s a good idea to keep a check on the supplier’s stocks regularly. This can mean once a day or once in two days to make sure you don’t run out of stock, especially in case of seasonal items.
Even after taking these precautions chances are you might have issues or run into an out of order situation. In case like these, offer a customer with an alternative, it can be an upgrade, a different color or any other substitute you think would be appropriate for the out of stock item and let the customer decide what option they want to choose. Chances are your customer would be thrilled and go ahead with the sale. You might not get a return on your order but you surely will have a happy customer.
For related articles, check out the links below –
- Things to consider when choosing a dropshipping supplier
- FAQs about Dropshipping on eBay
- How to provide excellent customer service
Until next time! xoxo