Over the last few weeks, we’ve talked about the pros and cons of drop shipping. So far, we’ve covered the reasons that drop shipping is such a great product sourcing method for new (and experienced) online sellers, and gone over some techniques for overcoming the thin profit margins that drop shipping sometimes provides. This week, we’re going to cover the second-greatest challenge that online retailers face in drop shipping – losing control over their own customer service.
Let me explain what I mean…
When you buy your wholesale products in bulk and ship them out to your online customers, you are in charge of every aspect of your customer service. You can ensure that every order is filled accurately and packaged with care. You can see to it that each and every one of your customers’ orders is shipped out in a timely manner. If you see that you’re running low on an item, you can be sure to re-order more in plenty of time to avoid getting caught in a back-order situation and disappointing your customer. You alone have control over the way that customers perceive your business.
However, when you use a drop shipping wholesaler, you are giving up control over the logistical aspects of your customer service. If your drop shipper doesn’t send an order out on time, your customer is going to be upset with you. If the drop shipper packages the product flimsily and it gets broken in transit, you are the one who will wind up with negative feedback. And if your drop shipper runs out of an item and can’t fill your customer’s order, you are the one who loses a customer and misses out on their repeat business.
With all this potential for disaster, you might think I’m suggesting that drop shipping just isn’t worth the risk. But there are actually several steps you can take that will greatly minimize the risks inherent to drop shipping. The first and most obvious one is to make sure that you are only using reliable drop ship wholesalers, and there are a couple of ways to do that:
First, any drop ship suppliers who are willing to sell to you without requiring that you be a legal business are not wholesale drop shippers (even if they claim to be). Real wholesale drop shippers are just wholesale suppliers who offer drop shipping as an additional service. And legitimate wholesale suppliers won’t work with you unless you have a reseller’s license (sometimes called a sales tax ID). So the middlemen from the search engines who don’t require proof that you are a legal business, in order to sell to you, are not giving you real wholesale prices that will allow you to profitably drop ship.
The second thing you can do to make sure you are using only reliable drop ship wholesalers is to test their services yourself. Before you put any supplier’s products up for sale in your online store or auction, place an order with them and have it sent to you or to a close friend or family member. Then pay attention to how well the supplier does with your order:
- Do they provide your tracking information in a timely manner?
- Does the order arrive in the specified time frame?
- Is it filled correctly?
- Is the product in good condition?
- Is the packaging satisfactory?
If your contract specifies that your web store’s marketing materials will be enclosed with each order, check to make sure that they’re there. Also make sure that the supplier is not sending their own marketing materials to your customers.
Lastly, it’s a good idea to call the supplier’s customer service, while your order is in transit, and test them out as well:
- Are they helpful and friendly?
- Do they have the answers you need, or do they get you those answers quickly?
These are all areas that can tell you whether or not a drop shipper will be a reliable supplier. The way your drop shipper handles a test order lets you see what your customers will experience and tells you whether you want to move forward with a supplier, or whether you simply need to move on to the next one.
Besides only working with reliable suppliers, there are some other best practices that will help you avoid running into logistical problems with your drop shipping. One is to study your supplier’s policies and become very familiar with them – in particular, their terms and conditions of sale, their shipping policies and their return policies and procedures. These will impact your own shipping and return policies, so you it’s very important that you understand them inside-out. Let me give you a couple examples of what I mean:
If your drop shipper’s policy clearly states that they ship products out within 2-3 days of receiving an order, you need to factor that into your own shipping policy. If you advertise that your orders all ship out the same day they’re placed, you’re going to have some disappointed and probably angry customers whose orders don’t arrive as soon as they expect. And in this case, it’s not because your drop shipper isn’t reliable – it’s because you aren’t doing your homework.
Your drop shipper’s return policy may state that they don’t mail out replacement products until they received the original defective product. If you direct your customers to send broken or defective products to your business’ mailing address and then you return those products to the drop shipper, your customers will have to wait a very long time before their replacement products get mailed out. But if you know that your drop shipper prefers that returned products be sent straight to them, you can direct your customers to do so, allowing them to get their replacements as quickly as possible (and saving yourself some extra work in the process).
The next practice is to address any potential shipping and delivery issues before they become real problems. Each time an order ships out, your drop shipper should provide you with the tracking information for that package. You, in turn, should pass that info on to your customer right away. Even though you are passing that info along, you still want to monitor the status of your customers’ orders.
For instance, if you see a package that should have been shipped is still pending, you can let your drop shipper know right away. If you see there’s a delay in shipping, you can contact the shipping carrier, find out what’s going on, and then contact your customer to let them know. The point is, you need to be proactive in resolving potential customer service problems, rather than waiting for your customer to come to you and complain that they never received their order. Even though drop shipping limits your ability to control some aspects of your customer service, you can still excel at the functions you do have control over.
Another good drop shipping practice is to monitor your drop shipper’s inventory levels, keeping in mind that (unless you have exclusive distribution rights to a product), you’re not the only retailer drawing from their supply. When you see that they only have a few of a given item left, you may want to consider pulling that item from your store or auction listings until the supplier restocks. Some suppliers will even allow you to request notifications when their inventory on the products that you sell drops beneath a certain level.
Paying careful attention here will ensure you don’t have customers ordering products that your drop shipper is out of. Be sure to pay special attention to the supply levels on your fastest-selling goods, because telling a buyer their product they’ve ordered is out-of-stock is never fun. Holiday buyers, in particular, want to know that their orders will arrive on time, so this practice becomes even more important during the holiday selling season.
The last good practice we’ll cover is to have product back ups. In other words, you should actually STOCK a few of your best-selling items. In the event that you do find yourself in a back-order situation, you can fill your customer’s order yourself.
And on a side note, if you aren’t paying attention and find yourself with a holiday order that neither you nor your drop shipper can fill, you may want to consider picking up the item at retail or even ordering it from another website and having it shipped directly to your customer. While you’ll almost certainly lose money on the sale, you will save the customer relationship (in fact, you’ll most likely create a loyal customer for life) and you’ll enhance your business’ reputation for customer service.
If you follow these drop shipping tips, you won’t lose control over your customer relations and you’ll find that the benefits of drop shipping FAR outweigh the limitations.