Why Drop Shipping can be More Profitable (and Less Time Consuming)

Ultimately, every business must deliver product on time at the lowest possible cost and remain profitable.  To do that, however, you need to manage a lot of moving parts from manufacturing, to warehousing, to order processing and shipping – not to mention all of the exceptions that occur and possible, subsequent charge backs.  Plus, you get to pay for all of the EDI documents needed.  At an average of $4.00 per order that’s incredibly expensive all by itself.  

All of these things combined really hurt your business’ profitability.

The first big part of successfully solving this puzzle focuses on a dramatic reduction in order processing time, order processing cost and order errors.  The second big part is eliminating, or at the very least substantially reducing, the cost of EDI in working with your trading partners.   But how do you do that?

Here’s how: OPAL is an intelligent, self-driving drop ship and large order fulfillment software solution that brings most of these technologies together into one complete platform,  plugs into your existing ERP / Accounting software investment and truly automates the entire order process, working 24 hours a day, 7 days a week.  

IN LESS THAN 8 SECONDS, OPAL automates receiving orders from retailers and e-tailers, manages all transaction communication, processes and invoices orders through a supplier’s ERP and accounting system, and creates packing slips and custom branded 3rd party shipping labels per any retailer’s or e-tailer’s requirements.  Once shipped, it sends back tracking information and invoices to the retailer or e-tailer, as well as tracking packages and sending inventory updates.

OPAL also takes advantage of the direct communication links provided by retailers and e-tailers enabling a supplier to process a drop ship order with $0 cost for EDI documents – or an LTL, Full Truck Load or Container order for that matter.  OPAL downloads POs from retailers and e-tailers, sends back Acknowledgements, ASNs, Invoices and Product Inventory with no translation or transmission charges regardless of the format required (EDI, API, HTML or JASON) and is 100% compliant with each retailer.  

So where do the savings really come from?  Just compare the cost of a traditional drop ship order to how OPAL accomplishes the same thing:

Traditional Drop Shipping

2,000 orders worth $20 each

Order processing cost approximately $4 each

Shipping time of 2 days

Labor and Infrastructure cost:

  • 8 clerks
  • 8 PCs
  • 8 Desks

4,000+ EDI Transaction Charges

OPAL Drop Shipping

2,000 orders worth $20 each

Order Processing Cost of 40 cents each

Shipping Time of 2 days

Labor and Infrastructure cost: 

  • 1 Clerk
  • 1 PC
  • 1 Desk

Zero EDI Transaction Charges

So, if you employed OPAL, eliminating the cost for things like EDI document charges, EDI management and troubleshooting labor, order processing labor, reduced order exceptions to less than 5% of your order volume, and accomplished it with a total cost of CENTS rather than DOLLARS, wouldn’t that increase your business’ profitability? 

Are You a Drop Shipper?

If you sell a product, pack it, and ship it in small quantities then you are a drop shipper. Unlike bulk LTL, truckload or container orders, drop shipping can be a complicated, time consuming process for not a lot of revenue per order and 20% of your orders can take as much as 80% of your time and resources. 

The most profitable business model, of course, is Bulk Shipping.  It requires less overhead to manage processing and the revenue on each order is much, much larger.  However, for better or worse, drop shipping is the wave of the future.  E-tailers like Wayfair, Overstock and countless others are placing enormous pressure on traditional brick and mortar retailers.  Some of these, Walmart for example, are forcing their suppliers to become Drop Ship Vendors (DSV) and are expanding their e-Commerce capabilities. In fact, virtually all brick and mortar retailers are searching for ways to compete more effectively in the e-Commerce world. 

Bulk shipping won’t ever disappear; however, drop shipping by you as a supplier will become more and more necessary. 

With the right tool, though, you can simplify the impact on your business and make drop shipping highly profitable.  Automation is the key when drop shipping and to reducing its overall business cost. For example: Do you pay for EDI services? Do you receive your orders automatically? Are pick lists, shipping labels and packing slips generated automatically for the warehouse without a bunch of 3rd party software applications needed? Is your inventory automatically updated and communicated to your retail marketplace? Are invoices automatically sent? Are tracking numbers automatically sent and shipments tracked? 

Can your process do all of this and more in just 8 seconds per order, 24 hours a day, even if your business is closed?  Probably not.  

So how do you prepare?  OPAL enables you to process all (drop ship and bulk) orders within one software platform, eliminating the need for most of the 3rd party applications you may be using.  Additionally it enhances the investments you’ve made in your ERP or accounting software, automating order processing related activities.  AND…most importantly, it removes 90%+ of the overhead cost of drop ship order processing and levels the playing field with bulk shipment order processing cost. 

Do You Meet Drop Ship Order Expectations Every Time?

OPAL is the first and only smart platform that combines all of the needed drop ship automation capabilities into one place.  It , requires no human intervention, works 365×24, automates and enhances your ERP order processing capability, is fully compliant with all on-line marketplace requirements, provides document data translation and transmission without errors at zero cost, and works with your 3PL or warehouse to provide all labels and information needed to pick, pack, ship and track an order. And, best of all, it will process those drop ship orders in less than 8 seconds.

This kind of automation has become a necessity.  On-line marketplaces (Wayfair.com, Overstock.com, Walmart.com, Amazon.com, etc. etc.) all have increasingly high expectations.  After all, they need to enhance their brand, move ahead of their competition and reduce their order cost to a minimum.  More and more, they want their suppliers to drop ship from their own warehouse rather than one of their fulfillment centers, provide acknowledgement, tracking number, ship it in three (3) days maximum, provide accurate invoicing and provide them with accurate item inventory updates.

Unfortunately the tools they give you to do this are cumbersome and labor intensive, causing most suppliers to cobble a variety of technologies together to ease that labor intensity – all of which usually still requires some level of dedicated staff and time to ensure everything goes smoothly.

Consumer expectations, as well, are getting higher almost every day.  If they order something at 3:00am Saturday morning, they want to see an acknowledgement, tracking number and expected delivery date right away.  They also expect to receive that order in a few days at most.

Drop Shipping is difficult, costly and all too often not as profitable as it should be. A big part of that comes from everything required to meet your customer’s expectations.  You need process management and automation to succeed. There IS a better way to do this!  OPAL can do this!

Are You Meeting Customer Expectations?

Drop Shipping is difficult, costly and all too often not as profitable as it should be.  That is a universal truth.  A big part of that comes from everything required to meet your customer’s expectations.  And by “customer” I mean not only the end consumer that you’re shipping to, but also the retail marketplace that you are using to reach the consumer.

Consumer expectations are getting higher almost every day.  If they order something at 3:00am Saturday morning, they want to see an acknowledgement, tracking number and expected delivery date very quickly.  They also expect to receive that order in a few days at most.

Marketplaces also have increasingly high expectations.  After all, they need to enhance their brand, move ahead of their competition and reduce their order cost to a minimum.  More and more, they want their suppliers to drop ship from their own warehouse rather than one of their fulfillment centers, provide acknowledgement, tracking number, ship it in three (3) days maximum, provide accurate invoicing and provide them with accurate item inventory updates.

Unfortunately the tools they give you to do this are cumbersome and labor intensive, causing most suppliers to cobble disparate technologies together to ease some of that labor intensity.  This usually includes things like an Enterprise Resource Planning (ERP system), a method to translate, send and receive data to / from the marketplace, software to automate management of that data and software to communicate with shipping carriers – all of which usually still requires some level of dedicated staff and time to ensure everything goes smoothly.

In 2014, a drop ship supplier experiencing these growing customer expectations and technology challenges, came to us, Cityon Systems, a software development company, and said “there has to be a better way to do this!”  

This led to the birth of OPAL, the first and only smart platform that combines all of the needed capabilities into one place for drop shipping.  It automates and enhances your ERP order processing capability, requires no human intervention, works 365×24, is fully compliant with all marketplace requirements, provides document data translation and transmission without errors at zero cost, and works with your 3PL or warehouse to provide all labels and information needed to pick, pack, ship and track an order.

And, best of all, it will process those drop ship orders in less than 8 seconds.

Simple Drop Shipping

You receive an order, pick it, pack it and ship it to the consumer.  That is simple drop shipping.  Unfortunately, reality is never that simple.  To be cost efficient you need automation.  And by that I mean DROP SHIPPING AUTOMATION THAT DOES EVERYTHING FOR YOU WITHOUT THE INTERVENTION OF ORDER PROCESSING PERSONNEL.  For example, does your software AUTOMATICALLY:

ü  Retrieve the order (EDI 850) from the Retailer?

ü  Acknowledge the order (EDI 997) to the Retailer?

ü  Notify you if there’s an exception?

ü  Finalize the order requirements?

ü  Determine packaging requirements for the shipment?

ü  Create a Sales Order or Invoice in your accounting system?

ü  Generate and print a Pick List?

ü  Generate and print Shipping Labels?

ü  Generate and print 3rd party Packing Slips?

ü  Send the order confirmation (EDI 855) to the Retailer?

ü  Send the ASN to Retailer (EDI 856)?

ü  Invoice the Retailer (EDI 810)

ü  Send item inventory to the Retailer (EDI 846)

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 may 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 by knowing the business compliance requirements of every retailer, processing your drop ship orders in less than 8 seconds, 24 hours a day, with 100% EDI compliance and zero EDI document costs.  Please visit us at www.opal-llc.com or call us at 469-661-2407 to schedule a 15 minute demonstration and see what it can do for you.

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.