Drop Shipping Costs versus Bulk Shipping Costs – They Should Be Similar
Wise financial managers have long resisted entering the drop ship business. After all, it’s much more profitable to process a large LTL, truckload or container order than it is to process one order, one item at a time. The economies of scale are enormous in bulk shipping! Let’s take one example of bulk shipping versus drop shipping:
Bulk Shipping Drop Shipping
1 order worth $40,000 2,000 orders worth $20 each
Order Processing Cost of $4 Order Processing Cost of $4 each
Shipping Time of 2 Weeks Shipping Time of 2 Days
1 Clerk, 1 PC and 1 Desk 8 Clerks, 8 PCs and 8 Desks
2+ EDI Transaction Charges 4,000+ EDI Transaction Charges
It’s pretty clear that Bulk Shipping is more profitable, right? But does it have to be? Not really. What if drop shipping looked like this, instead?
Drop Shipping with OPAL
2,000 orders worth $20 each
Order Processing Cost of 40 cents each
Shipping Time of 2 days
1 Clerk, 1 PC and 1 Desk
Zero EDI Transaction Charges
Makes a pretty substantial difference don’t you think? And it certainly opens up a lot of new markets for your products. But what about 3PL picking and packing costs? Certainly these would increase when drop shipping wouldn’t they? After all there’s more handling. Potentially, but these can be overcome as well. When using a 3PL, all successful drop ship suppliers have renegotiated pick and packing charges with their warehouse provider. In addition, they often eliminate the cost of their 3PL’s Warehouse Management System by providing them with the Picklist, Packing Slips and Shipping Labels that are needed for processing, simplifying the process and reducing the cost.
This is what OPAL gives you: 1) Efficiency – process a drop ship order in less than 8 seconds without touching a keyboard, 24 hours per day, 7 days per week, 2) Simplicity in warehouse management, providing your 3PL(s) with pick lists, customized 3rd party shipping labels and packing slips at their fingertips, and 3) No EDI Charges – execute all of your EDI transactions without manual intervention or transaction cost.