Why be a Drop Ship Vendor?

You know that big box retailers like Walmart, Target, Kohl’s, etc. are expanding their presence in the e-commerce world as a means to compete more effectively against more agile e-retailers like Wayfair, Overstock and so on.  Like it or not, e-commerce (and drop shipping) is a market segment that’s growing by double digits year over year.

There are BIG reasons for retailers to move in this direction but there are also BIG advantages to the suppliers working as a drop ship vendor (DSV).

One of the biggest advantages is your risk as a supplier can be spread across MANY retailers as opposed to big box programs that can end without notice at any time leaving you with unsold inventory and a huge financial loss. 

Another advantage is better margins.  In typical big box brick and mortar fulfillment you can get beat down on price with the expectation of making it up in volume.  Unfortunately, that rarely if ever happens – you end up taking lower margins due to allowances. 

Lastly, online shopping is a powerful and lucrative force that allows you to be agile and react quickly to market demands, to observe changes and gain a better sense of real-time demand for product making inventory forecasting easier. 

But to succeed you need to follow the Retailer’s rules!  The truth is that non-compliance by suppliers can cost retailers literally billions of dollars in unexpected processing and rework.  When you, as a supplier, make money for your retailers they will value your relationship more highly. 

More and more retailers are recommending OPAL to their suppliers for this reason. 

For the Retailer, OPAL is 100% compliant.   OPAL processes a retailer’s orders for the supplier and complies with all necessary transactions (Acknowledgement, Confirmation, ASN, Invoices, etc.), PO pricing, packaging, labeling, shipping documentation and accurate, on-time inventory feeds in just a few seconds per order.  This speed and accuracy makes a supplier much more valuable to their retailer

For your business’ productivity, OPAL processes orders with a no-touch, self-driving approach that works 24×7, without the need for an additional Warehouse Management System, Shipping Software, Retailer Portal or EDI company.  It also reduces Order Processing time by up to 90%, Order Processing Cost by up to 80% and Undelivered Packages to less than 1%. It also increases Order Accuracy up to 99%, as well as increasing Picker / Packer Productivity and Daily Shipments by 25%-50%.  All without EDI charges.

Can You Process an Order in 5-8 Seconds?

Yes, OPAL will process your drop ship orders in 5-8 seconds, 24 hours a day, 7 days a week, with 100% of the Vendor Compliance required by your retailer and with NO EDI COST!  It will even simplify and reduce the steps required to do pallet shipments. 

But maybe, even more importantly, OPAL is configured to each business’ financial needs and processes – small or large, one size and process does not have to “fit all” businesses. 

OPAL is the only self-driving (think ROBOTIC) order fulfillment software solution in the market today that:

  •         Automates receiving orders from retailers and e-tailers

  •         Manages all EDI transactions

  •         Invoices orders in your accounting system

  •         Manages inventory

  •         Sends inventory feeds to your retailers based upon their compliance requirements

  •         Creates Packing Slips, custom branded 3rd party Shipping Labels per any retailer’s or e-tailer’s requirements, Bills of Lading and UCC128 labels

  •         And, once shipped, it sends back tracking information and invoices to the retailer or e-tailer, as well as tracking packages.

 

All WITHOUT ANYONE managing the order or touching a keyboard.  All you need to do is pick, pack and ship product from the warehouse

It even has Warehouse Management capabilities that can increase the efficiency and output of your warehouse, increasing daily shipments by more than 25%! 

So what does this REALLY mean to an e-commerce business?  Joe Miller, CIO of REACHbarrier, a company that provides an easy, affordable way for homeowners to save on energy costs by reducing their energy consumption experienced this common problem: 

“We have products that sell for $11-$15 and were unable to sell them on-line due to the order processing cost. With OPAL we were able to lower our order processing cost to $.50 cents or less an order, opening up a whole new sales avenue to us. In addition, it used to take two people to process 100 orders per day. Now, we process thousands of orders daily during peak periods.” 

In addition, have you ever thought about how many EDI documents you’re paying for per order?  Well, for a simple drop ship order you are going to need at least five and the average order file size is 1KC (one thousand characters).  Each one costs around $.06 cents. That may not seem like a lot, but here’s what Victoria Bouldin, Vice President of Primetime Petz experienced: 

“We sell our pet gates to the top 20 retailers in the market and were paying $1,100 per month in EDI charges.  With OPAL all of that is gone. The other thing that we really like about OPAL is that it has taken all of the errors out of our order processing.  Everything is accurate and everything ships on time. It’s enabled me to focus on growing the business without having to worry about managing order processing.” 

Are You Prepared for a World Without EDI?

Do you remember the days when business was run through computers that were disconnected?  It’s certainly been a while, but that’s when EDI helped businesses exchange data to save time and cost of transmission. 

EDI has continued to play a significant role over the last five (5) decades.  However, over the last twenty (20) years there has been a major shift in the industry because of Internet technology:

  •         Computers are now seamlessly connected
  •         And data transmission cost is ZERO. 

The only thing that has not changed is EDI.  At this point, it just delays communication and increases your cost per order as a supplier. 

Everybody wonders then: “Why are companies still using EDI?”   The simple answer – resistance to change – AND denial of harsh realities.  The fact is, many retail players are going out business – but not because of their product line—it’s because of antiquated technology and their inability to adapt. 

The unrelenting pace of eCommerce and the proliferation of drop shipping is forcing retailers to rethink the use of such an outdated tool as the backbone of their business operations.  They need technologies that work in real time that allow data to be transmitted from one system to another in seconds WITHOUT those expensive EDI Document fees for themselves and their suppliers.  Progressive retailers such as Wayfair are already moving in this direction and others will follow. 

As a supplier you know that all companies, large or small, that sell product on-line or for warehouse fulfillment to retailers and e-tailers eventually find themselves in a position where they need to rely on EDI to communicate with them.   It’s a hassle, forcing many suppliers to employ individual(s) just to manage it and keep it accurate.  

So, does EDI really have a sustainable future?  Some experts are predicting as little as five (5) more years before it’s obsolete in its current form.  

That means that, as a business, you have two options:  You can continue as things are and possibly wait till it’s too late, or you can investigate OPAL.  

OPAL (Order Processing and Logistics software) has already eliminated current EDI charges for communication with your retailers and 3PLs – AND already has the capability to provide this communication in the real-time method that retailers will be coming to expect.  

The “Perfect” Drop Ship Order – What’s at Stake?

What does a “perfect” drop ship order really mean? If you believe you know, you also know that managing the multitude of moving parts necessary to achieve it can be mind boggling.

We’ve written of managing the “perfect order” before and that OPAL (Order Processing and Logistics software) can help you succeed, but it’s really important to understand what is at stake for your business.  With an average warehouse pick and pack cost of $4 – $7, plus a minimum of $2 – $4 order processing labor cost, and at least $1 in EDI document fees per drop ship order, the profit on many items is already being squeezed now that you’re shipping individual parcels instead of pallets.

And, then, when an order goes wrong everything stops! You spend an enormous amount of extra time and effort researching and correcting the problem and very often incur the expense of a call tag to retrieve the incorrect item and expedited shipping of the product that didn’t arrive when or where it was supposed to. Then, to top it all off, you receive Vendor Compliance Penalties averaging 1% or more of revenue from your retailer and your Vendor Score Card suffers.   If it’s a chronic problem, your retailer doesn’t want to work with you anymore. 

The American Productivity and Quality Center, (APQC) defines the “perfect order” as flawlessly taking and fulfilling a customer order. This includes entering the order correctly, allocating inventory immediately, delivering the product on time, and sending an accurate invoice. Then your retailer adds on additional requirements such as all the necessary EDI documents (Acknowledgement, Confirmation, ASN, Invoices, etc.), PO pricing, packaging, labeling, shipping documentation and accurate, on-time inventory feeds

It is speed and accuracy that makes a supplier valuable to their retailer.  Your inability to perform costs retailers billions of dollars every year in unexpected rework and processing.  This is what is at stake for your business.

So, what makes OPAL different and what does it mean to you? 

OPAL is 100% compliant with nearly 100 retailers – and new ones are being added each month. OPAL processes a retailer’s orders for the supplier and complies with all necessary transactions (Acknowledgement, Confirmation, ASN, Invoices, etc.), PO pricing, packaging, labeling, shipping documentation and accurate, on-time inventory feeds.  This performance standard makes you very valuable to your retailers, increasing your business with them.

OPAL also reduces your operating costs because it processes orders with a no-touch, self-driving (autonomous) approach that works 24×7, without the need for an additional Warehouse Management System, Shipping Software, Retailer Portal or EDI document charges.  And it does it in less than 8 seconds per order.

Lastly, it increases your overall productivity by reducing Order Processing time by up to 90%, Order Processing Cost by up to 80% and Undelivered Packages to less than 1%.  It even increases Order Accuracy up to 99%, as well as Picker and Packer Productivity and Daily Shipments by up to 50%. 

Consider OPAL as your solution, an intelligent software system that manages the order processing and fulfillment workflow in a method that is efficient and retailer compliant.  Power up and power on with OPAL. 

Are Vendor Compliance Penalties Inevitable?

Like the cost of EDI, many suppliers believe that Vendor Compliance Chargebacks are just a cost of doing business and have resigned themselves to accepting less revenue and profit.  But, also like EDI, chargebacks DO NOT have to impact your revenue and profitability.  It can be a win-win situation.

The truth is that non-compliance by suppliers can cost retailers literally billions of dollars in unexpected processing and rework.  When you, as a supplier, make money for your retailers they will value your relationship more highly. When you don’t, the opposite is true and it will be reflected in your Supplier Scorecard and subsequent penalties.

In fact, it’s estimated that Vendor Compliance Chargebacks can now amount to 1% or more of revenue due to a supplier’s failure to comply with retailer order, billing and shipping requirements. 

To this end, large retailers like Wayfair and Walmart recommend OPAL to their suppliers in order to address these issues – for two very important reasons: 

  1.       OPAL is 100% compliant with not only Wayfair and Walmart requirements, but also nearly 100 other retailers – with new ones being added each month. OPAL processes a retailer’s orders for the supplier and complies with all necessary transactions (Acknowledgement, Confirmation, ASN, Invoices, etc.), PO pricing, packaging, labeling, shipping documentation and accurate, on-time inventory feeds in just a few seconds per order.  This speed and accuracy makes a supplier much more valuable to their retailer. 
  2.       For the supplier, OPAL processes orders with a no-touch, self-driving approach that works 24×7, without the need for an additional Warehouse Management System, Shipping Software, Retailer Portal or EDI company.  It also reduces Order Processing time by up to 90%, Order Processing Cost by up to 80% and Undelivered Packages to less than 1%, while also increasing Order Accuracy up to 99%, Picker and Packer Productivity and Daily Shipments by 25%-50%.  All without EDI charges.

Stopping Vendor Compliance Chargebacks comes from taking the time and resources to understand why the problems are occurring and the steps that must be taken to keep them from occurring in the future.  Implement OPAL, an intelligent software system that autonomously manages the order processing and fulfillment workflow in a method that is always retailer compliant.  Power up and power on with OPAL.

Brick and Mortar Sales Are Not Dead – But They’re Far From Healthy

A recent Washington Post headline just stated: ‘Retail apocalypse’ now: Analysts say 75,000 more U.S. stores could be doomed”.  ”Widespread closures have roiled the retail industry, but many more stores are likely to shut down in coming years to keep up with a shift to online shopping, according to a report by investment firm UBS.” 

The main reason for the shift, analysts say, is simple: Americans are increasingly shopping online. The average U.S. household spent $5,200 online last year, up nearly 50 percent from five years earlier.  That’s a lot of small parcel and large parcel deliveries to home addresses! 

This indicates that your future as a supplier is in transition.  Do you continue to focus on large pallet shipments to these retailers or do you start, or do you expand, your e-Commerce footprint

Unfortunately, to do this, it takes as much time and effort to process, pick, pack and ship a $20 order in the Direct to Consumer world as it does a $200,000 order in the Direct to Store or Direct to Distribution Center world.  And the number of orders going Direct to Consumer are exponentially larger

So, consider this very real situation as an e-Commerce Supplier:  You are handling at least 50 drop ship orders each day, selling to multiple sales channels such as Amazon, Target, Home Depot, Walmart, Wayfair, e-Commerce sites, etc., creating packing slips, creating shipping labels, creating customized pick lists, scanning orders, sending tracking numbers and invoices to trading partners, updating accounting systems, and tracking packages. 

Then you need to send up-to-date, accurate inventory feeds to all of your sales channels – as often as once every hour!  Not to mention you still have the warehouse manual process of picking and packing all of those smaller parcels. 

To not only survive but thrive, you need speed, efficiency and scalability.  This means: 

  •         You Just pick and pack and an autonomous system does the rest for you
  •         Warehouse pick and pack is optimized, growing the number of daily shipments made by 25%-50%
  •         Nothing else is needed – no Warehouse Management System, shipping software, EDI companies or retailer portals
  •         And, you can grow your business without increasing your costs or hiring additional employees. 

You can take control of your future and see how you can ensure future success and an unmistakable competitive advantage.  Not only can you outlast and surpass competitors who either ignore or simply don’t know until it’s too late, but you can also realize a quantum leap in profitability with a huge savings in time and labor costs.  Power up and power on with OPAL.