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7 Drop Ship Automation Imperatives

Chances are that you’ve automated your e-commerce, drop ship business.  But, what does automation mean to you and how automated are you?

 The truth is that automation should eliminate the problems, complexities and costs of drop shipping and do things like: 

  • Require little to no trained staff to manage order fulfillment.
  • Plug in to and enhance the existing investment in your ERP or accounting / inventory automation software and fill in the missing gaps.
  • Be intelligent and self-managing so that orders are processed accurately and in seconds, 24 hours a day, 7 days a week – even when there’s no one in the office.  
  • Communicate with your customers via EDI without needing a 3rd party to charge you for EDI documents.  
  • Automatically communicate with shipping carriers and alert you to shipment status.
  • Easily plug into your warehouse pick, pack and ship operations.
  • Not only automate but simplify the way you work.

You may think you are automated because you have a sophisticated ERP (Enterprise Resource Planning) system or you may simply be using QuickBooks for accounting and inventory.  You also have software applications that help manage shipping and labels.  

The problem is that this automation still requires trained order processing personnel to manage each step or, even worse, they may have to duplicate the entry of information into each software application opening the door for human error. 

And then, of course, there’s EDI (Electronic Data Interchange) when it’s required to do business with a particular customer.  This can take two basic forms:  First the EDI provider you’re working with may be simply providing a secure translation and data exchange for you, such as a Value Added Network (VAN) or they may be a full service EDI provider that has integrated with your business processes and help you manage order processing.  In either case, it just means more complexity and cost. 

Automation, real automation, is a necessary part of growing your business.  When your business is seamlessly connected the possibilities for growth become evident and easy to achieve.  OPAL can help you do this.

Obstacles to a Supplier’s E-Commerce Success

Retailers must offer the lowest cost of order processed compared to their competition.  It’s an imperative and we see it permeating the market all the time in different ways:  Walmart’s acquisition of Jet.com to improve its speed and agility, Sears removing the cost barrier of mandating CommerceHub as the EDI portal that its suppliers must use to work with them, and the list goes on.  

A big part of achieving this goal for retailers is migrating their suppliers into a drop ship e-commerce model.  After all, retailers don’t need to spend a single penny when utilizing drop shipping – it’s an extremely convenient transaction for them.  Retailers simply ask the customer to fill out an order form and then submit it to their suppliers for sorting and fulfillment. And lastly, but critically important, retailers don’t have to worry about having a large warehouse to store products. 

There are drop shipping advantages for the supplier of course, but it also creates a number of obstacles that can be very difficult to overcome:

  • A dramatic increase in order volume and the speed in which they must be processed
  • The additional cost of processing all of those additional orders can seriously impact profitability
  • Often, there’s lost revenue opportunity due to limited order processing capacity
  • And, it’s very difficult to maintain the correct inventory presentation across many retailers which can lead to underselling or overselling. 

All of this can impact your key business metrics in the areas of:

  • Profitability per SKU
  • Chargebacks
  • Scorecards
  • Number of customer complaints
  • Number of delayed shipments
  • Number of cancelled orders
  • Inventory accuracy
  • AND COST PER ORDER.

There are a number of perennial solutions to these issues such as ERP systems and / or third-part supply chain management companies like SPS Commerce or CommerceHub.  Unfortunately, all of these solutions still require trained staff to manage the process AND cuts into your product profitability when drop shipping.

What’s needed is an extension to an ERP’s order processing capability so that you can truly automate order processing, sales orders, invoicing, inventory tracking and connect directly with your retailers and e-tailers without EDI translation and transmission fees and the need for trained order processing personnel.