Launching a Dropship Program: How to approach challenges and succeed
Working with a new business model can be daunting, but if, as a retailer, you prepare yourself from the beginning, dropshipping can become a high revenue, low risk opportunity for you. Outside of the traditional retail model, dropshipping requires integrating with the vendors supplying and delivering the product to your consumers. Make sure you are working with a platform that can handle these complexities, and think through your policies before launching a dropship program. The following are some of the most important elements that retailers should consider to ensure their dropship business is a success.
Determining your dropshipping rules
The first step is to know the benefits that you are bringing today to your customers and to make sure you are applying the same standards to the dropshipping program you are offering. Customers demand a seamless dropshipping experience, so both the vendor and the retailer need to align on performance and customer expectations.
While there are many things to consider before launching a dropshipping program, two of the most important are inventory and return policies. Make sure you and your vendors are aligned on both of these; by operating under the same codes and standards, vendors and retailers can ensure a positive customer experience through dropshipping.
Risk of inventory shortages
While dropshipping offers an extended aisle of products for a retailer to sell to their customers, it is important to keep in mind that in most cases inventory is treated as “first come, first served.” This means that any available inventory may be spread across multiple retailers. Because of this, it is important to make sure vendors are providing inventory updates to the retailer as frequently as possible.
Moreover, verify you are tracking the products that are often selling out as well as the vendors that have trouble complying to your inventory update requirements. You can also consider removing products from your site once inventory drops below a certain threshold. RevCascade is built to handle throttling and deal with demand by adjusting inventory levels to account for high sell-out rates. Protecting the customer’s experience should be the retailer’s priority, and inventory controls is one important tool to manage consumer expectations.
Returns done right
Dropshipping and returns must be done right to ensure a smooth customer experience. That is why it’s very important to create a standard returns policy that you can implement with all of your vendors. Confirm that you are communicating to customers on how they should handle a return: Can they bring the item into a store to return it? Do they need to mail it back to the vendor? How can they exchange an item? These are all factors to consider when creating your return policy.
Dropshipping can add complexity to a traditional e-commerce website, but the upside is worth the work of establishing your dropship program’s policies. With proper processes and good practices you can ensure a seamless experience for the consumer and untapped revenue for the retailer.