3 HUGE Drop Shipping Problems to Fix

Anyone that drop ships product directly to consumers is painfully aware of these issues:

  1. The order processing labor cost to process small orders and the impact it has on the order’s profit.
  2. Growing your drop ship business doesn’t solve the problem – you end up needing to add more staff to keep up with the workload.
  3. Your retailers and e-tailers either require you to manually use their portal OR a 3rd party company to communicate with them (POs, Acknowledgements, ASNs, Invoices, etc.) which just cuts further into each order’s profit.       

Many suppliers that I talk to believe they’re automated – or at least as much as they can be – but they still suffer with these problems.  They have a 3rd party EDI Company connected to their customer, they can get POs dropped into their Accounting or ERP system and they have 3rd party software for tracking numbers and shipping.  It’s true – that is AUTOMATED but it’s not AUTONOMOUS (think ROBOT).  Order processing people are still spending time managing the order process from receipt to shipping and responding to problems along the way.

So what’s the solution?  What if you could do this?

  1.   Handle 95% of your drop ship orders entirely autonomously without the need for order processing personnel and allow them to focus on that 3% – 5% that actually require human intelligence and intervention.  Given the 8-12 minutes that they can spend on every drop ship order that typically equates to $3+ added in to the profit on 95% of your incoming orders.  That’s a pretty substantial percentage on orders of less than $100.
  2.  Process incoming orders 24 hours per day, 7 days per week, autonomously, without adding staff.  This gives you the ability to increase order volume and grow your business exponentially without adding order processing staff.
  3. Remove the costs associated with 3rd party EDI companies and instead communicate with your retailers and e-tailers directly – AND WITHOUT GOING TO A PORTAL.       

OPAL provides the only INTELLIGENT and AUTONOMOUS (once again, think ROBOT) drop ship processing software solution that handles the vast majority of your drop ship orders in 8 seconds or less, in full compliance with your retailer and e-tailer requirements and without the need of a 3rd party to communicate with them.  It even simplifies and speeds much of the Bulk Shipment order process, as well.

OPAL is scalable and is configured to each business’ processes – small or large, one size and process does not have to “fit all” businesses.

OPAL receives orders from retailers and e-tailers, manages all document communication with them, processes and invoices orders through your ERP or Accounting System, creates picklists for the warehouse 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 lets you know when one of those 3% – 5% of order exceptions occur so that it can be addressed promptly.

Growing Your On-Line Retailer Sales with Better Product Content

Product Content – the information you provide on-line at retailer websites describing your product – is the secret ingredient when selling through e-Commerce Channels.  The depth of detail and the content design used to showcase your product on Wayfair.com, Overstock.com, Hayneedle.com, Amazon.com, Walmart.com, etc., etc. determines if consumers are going to FIND your product and if they’re going to BUY it.  Consumers are taking charge of their own shopping journey and it’s becoming clear that you have to deliver a superior digital product experience to get their attention.     

According to Salsify, here’s how product content drives your e-commerce success: 

  1. It’s how your consumer finds you – 81% of shoppers conduct online research before they make a purchase.
  2. Product content is SEO gold, both with search engines and with retailers – Brands that submit content to Google can boost sales by as much as 25% for retailers advertising their products.
  3. It’s what drives sales – 73% of consumers cite detailed product content as their number one criteria for clicking the “Buy” button.
  4. And, it’s not optional – Your shoppers are digital, and all retailer and product related marketing activities require a baseline of accurate, approved, rich product content. 

Content and technology experts can also be helpful to create and store product content, especially when online sales are important to your brand strategy or you sell on multiple online marketplaces.  For further information on this topic click:  11 Rules to Deliver Product Content that Sells to view Salsify’s e-Book. 

Fortunately, the next hurdle will be scaling your business to efficiently and cost effectively process the increased influx of orders that great content management will generate for you.

Yes, there are challenges, especially in the e-commerce world where you’re shipping directly to consumers (Drop Shipping).  However, OPAL removes them and even greatly reduces the workload for Bulk Shipments (LTL, Truckload and Container) as well.  

For example, A LABOR INTENSIVE DROP SHIP ORDER WILL BE PROCESSED IN 8 SECONDS OR LESS.  This means you can receive orders from your customer retailers and e-tailers, manage all of their EDI transactions, process and invoice orders through your ERP and accounting system, create picklists, create packing slips and create custom branded 3rd party shipping labels and get them to the warehouse for pick, pack and ship – 24 hours per day, seven days per week – even when there’s no one in the office.  And, you are also able to do all of that WITH ZERO EDI DOCUMENT COST!

5 Things your EDI Company Will Never Tell You

Do you really need a 3rd party EDI Company or VAN (Value Added Network) to send and receive data such as POs, Acknowledgements, Ship Notices, Invoices, etc. to your retailers?  With a very small number of exceptions, the answer is NO.  Fortunately for these companies, suppliers are often painfully unaware of the alternatives available.  In fact, there are 5 things a company making their living by being an EDI “middleman” will never tell you: 

  1. You don’t need them to work with all retailers. There are a few exceptions, but many retailers work with technologies that allow for direct connection and communication with them – eliminating those data transfer and transmission charges. 
  2. It does not cost an EDI company any money to send and receive your data over the Internet.  As an example, consider how much it costs to stream data on one of your mobile devices.  Not all that much, right?  However, if you were to stream a movie on your mobile device at the cost of EDI transmission it would be about $240,000. 
  3. EDI companies provide the slowest way to exchange information.  Essentially it is a batch process, meaning that transactions are sent in bulk to retailers, instead of when a transaction actually occurs.  As retailer expectations become higher and higher, some EDI companies are having difficulty meeting retailer timeframe compliance requirements. 
  4. Current EDI technology has been around since the 1980s and is not keeping up with market driven needs such as real-time communication.  To do this an Application Program Interface (API) is needed that enables no cost, real-time communication of transactions to occur. 
  5. The use of traditional EDI services is largely a “black hole” restricting your ability to see and manage what’s going on inside and can impact your competitiveness. 

To complicate matters, a retailer’s help line may very well point you to a specific EDI company that they work with when you are setting up with them, even though they have other alternative(s) available.  It’s just a simple way to get you connected and it doesn’t cost them anything.  As we said previously, suppliers are often painfully unaware of what alternatives are available. 

The majority of retailers do have alternative connections available such as API, FTP or AS2 which allows you to communicate with them directly.  These are the methods that OPAL employs whenever a retailer allows it, and OPAL does not charge for this data translation and transmission  – after all it is the Internet. 

Adapting to your specific business processes (not a one size fits all solution), as well as simplifying communication with your retailers, OPAL is the only autonomous drop ship and order fulfillment software solution in the market today.  Check it out!

The Importance of Accurate Inventory Reporting to Retailers

As I’m sure you are aware, many retailers and e-tailers require their suppliers to provide SKU inventory quantities on a regularly scheduled basis to ensure that they can fulfill the orders received or be able to determine that an item is out of stock.  It sounds simple enough, but there are some pretty major repercussions (i.e. scorecard dings and chargebacks) if you get it wrong.  

A huge problem that occurs frequently is overselling.  An example of this might be:  If you have ten (10) of an SKU in stock and report all ten (10) to three (3) retailers, you are indicating that you have thirty (30) of this SKU in stock.  If all of these retailers sell ten (10) of this SKU you’ve oversold and have to cancel orders for twenty (20) of them.  This results in scorecard problems and charge backs by the retailer. 

It’s a very real business problem for suppliers that work with multiple retailers and can cause unexpected financial problems.  To understand this problem, you need to ask the following questions regarding your business processes: 

  • SKU Inventory Accuracy – Is your inventory properly maintained, frequently updated and being decremented as orders are filled?  
  • Inventory Reporting to Multiple Retail Channels – Do you report all of your inventory quantity to each retailer?  Is it simple to allocate your inventory across retailers? 
  • Low Inventory Levels – Are you aware if a SKU’s inventory is dangerously low and cannot handle a large order? 
  • Frequency of Inventory Feeds – Are you sending inventory feeds to retailers as often as needed to keep them up to date?  Are you meeting their frequency compliance requirements? 
  • EDI Inventory Feeds – Are you sending inventory feeds using EDI?  Can your EDI provider provide the speed needed? 

If you’re managing these things either manually or semi-automatically using software systems that require manual input, it’s just going to be an uphill battle to eliminate the problem.  Your retailer, order processing, inventory tracking and invoicing all must be connected in a way that eliminates manual effort and expedites timely, accurate communication of information.  

If your current processes and investment in technology systems are unable to do this for you, then please visit OPAL.

Do You REALLY Need EDI?

First, you need to know that EDI is nothing more than a format for a specific record type such as a PO, Acknowledgement, Ship Notice, Invoice, etc.  Depending on the retailer, there may be other non-EDI record formats, such as XML, CSV, etc. in which you can communicate with them. 

So, the real question is do you need a 3rd party EDI Company or VAN (Value Added Network) to send and receive this data for you.  With a very small number of exceptions, the answer is NO.  No matter what the retailer’s help line says when you request information about setting up as a vendor. 

Unfortunately most suppliers are just unaware of the alternatives.  As a case in point, an OPAL user recently approached Houzz about getting connected and was told that they needed to connect through SPS Commerce.  Of course, this would require the traditional monthly fees and data transmission costs of an EDI provider to do business with them.  

However, the OPAL team was aware that there were other options available:  Houzz also offers API (Application Program Interface) connectivity and we were able to complete the connection without the use and cost of SPS Commerce. 

Of the nearly 90 major retailers that OPAL is currently connected with or in the process of connecting with for its customers, less than 10% actually REQUIRE the use of a 3rd party EDI Company in order to communicate with them – and this number is decreasing all the time as retailers add new connectivity options.  All others have alternative connections available such as API, FTP or AS2 which allows you to communicate with them directly.  These are the methods that OPAL employs whenever a retailer allows it, and OPAL does not charge for this data translation and transmission which eliminates these 3rd party charges. 

OPAL is the only self-driving drop ship and order fulfillment software solution in the market today.  Adapting to your specific business processes, OPAL automates receiving orders from retailers, manages all retailer communications, processes and invoices orders through your ERP and accounting system, and creates packing slips and custom branded 3rd party shipping labels per any retailer’s requirements in as little as 8 seconds per order.  Once shipped, it sends back tracking information and invoices to the retailer, as well as tracking packages and sending inventory updates.

What is the Future of EDI?

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 (Electronic Data Interchange) to communicate with them.   It’s a hassle, forcing many suppliers to employ individual(s) just to manage it and keep it accurate.  But does EDI really have a sustainable future? 

Well, first, let’s discuss its evolution and the path that this technology is on.  The EDI concept was introduced in 1960 and the first EDI document was sent in 1965.  The primary motivation behind the development of EDI was to facilitate better communication in the commerce / trading world by overcoming these obstacles: 

  • Computers were not connected
  • Data Transmission costs were very high
  • There was no consistent format for data files
  • There were no standards for file format  

EDI has continued to play a significant role over the last five (5) decades.  However, over the last two (2) decades there has been a major shift in the industry because of the Internet. Business processes have changed because of the Internet and the speed of data transmission has increased by a 100 fold.  The only thing that has not changed is EDI and the new reality is that now: 

  • Computers are seamlessly connected
  • Data transmission cost is zero due to the Internet
  • There’s no need for a file format to exchange data 

Everybody wonders then why do we still have EDI?   The answer is simple – resistance to change. Traditional businesses have been using it for so long that they no longer question it.  EDI companies, on the other hand, cannot change without destroying their revenue stream. 

As business has evolved, the Typewriter was replaced by the Telegram, the Telegram was replaced by Fax, and the Fax was replaced by EDI.  EDI is now being replaced by the Application Programming Interface (API).  

Businesses in the current time are far too dynamic to rely on such an outdated tool to be the backbone of their business operation.  APIs are a messaging format that allows data to be transmitted from one system to another in nanoseconds WITHOUT those expensive EDI Document fees.  Opal is the answer.  Book your FREE Demo now to learn more.