Bulk Orders AND Drop Ship Orders? Show Me the Money!

Currently, much if not all, of your order processing may be in the fulfillment of bulk orders: LTL, truck load or container shipments.  While not simple by any means, bulk shipment orders have high revenue values and can absorb a lot of order processing and handling costs and still be highly profitable.  Unfortunately, as you begin drop ship order fulfillment, you find that much of those same costs that apply to bulk shipments now severely impact the profitability of low revenue, single package orders.

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.  It’s actually a time consuming, detailed and often painful process with a great deal of pressure on profit margins.  Especially if you are selling through large retailers and e-tailers; additionally, industry trends over the last five years indicate that there’s going to more drop shipping in the future, not less. 

What’s needed is something that helps your team to continue managing those bulk shipments while even reducing some of those order processing costs, as well as making drop ship orders easy to handle and highly profitable, too.

OPAL is AUTONOMOUS and bridges both worlds – container, truck load and LTL shipments, as well as giving you the capability to efficiently and profitably drop ship orders.  Take a look at this pretty common cost scenario:

Traditional Bulk Shipping

1 order worth $40,000

Order Processing Cost of $4.00 Each

1 Clerk, 1 PC and 1 Desk

2+ EDI Transaction Charges

Traditional Drop Shipping

2,000 orders worth $20 each

Order Processing Cost of $4.00 each

3+ Clerks, 3+ PCs and 3+ Desks

4,000+ EDI Transaction Charges

OPAL Bulk Shipping

OPAL Drop Shipping

1 order worth $40,000

Order Processing Cost of $4.00

1 Clerk, 1 PC and 1 Desk

Zero EDI Transaction Charges

2,000 orders worth $20 each

Order Processing Cost of 40 cents each

1 Clerk, 1 PC and 1 Desk

Zero EDI Transaction Charges

But what does AUTONOMOUS really mean?  It enables you to eliminate nearly all, if not all, of the manual steps we must all perform when processing an order. 

This includes receiving orders from your customer retailers and e-tailers, managing all of their EDI transactions, processing and invoicing orders through your ERP and accounting system, downloading or creating custom packing slips, creating shipping labels, UCC128 labels and / or other required shipping documents, getting them to the warehouse for pick, pack and ship and monitoring delivery progress of the order.  Now, imagine doing that 24 hours day, 7 days per week, and only having to focus on the few exceptions that will inevitably occur outside of your control.  That’s what OPAL does for you.

May You Never Have to Drop Ship!

If you’re not already doing it, here’s hoping you never find yourself in the position where you have to drop ship your products directly to consumers.  It is a time consuming, detailed and often painful process with a great deal of pressure on profit margins.  Especially if you are selling through the large retailers and e-tailers.  But, if the 2017 industry trends are to be believed, you may very well find that you will need to adapt.

If you’re already drop shipping, you are aware of the problems:

  • 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, and if you don’t meet those expectations there are financial penalties.  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.
  • One of the highest expenses for any drop shipping business is labor.  It’s the wages you pay; plus having the correct number of employees on hand when you need them. Having more employees than orders to process can be costly and the other side of that is not having enough employees to process orders. 
  • Product profitability can be severely impacted, especially if the retail cost is low.  You may be selling more but your profit margin may be very thin or even non-existent. 

Now, on the other hand, large shipments can be very profitable because it requires much less order processing labor to handle those high revenue orders.

So, as I said:  May you never have to drop ship!  But many of you already are.  The retail world is changing rapidly with on-line shopping by consumers growing by double digits each year.  Are you ready for an inevitable change?

OPAL bridges both worlds – container, truck load and LTL shipments, as well as giving you the capability to expand more and more into the drop ship business as available without the problems we just spoke of.  It gives you the ability to grow and adapt over time, easily.

Are you striving to achieve productivity gains to increase drop ship order profitability?  Are you currently avoiding drop shipping, but see the writing on the wall.  Before dismissing the possibilities, please contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business.  Book your FREE Demo now.

Can You Hire an Order Processing Team for $800 a Month?

Do you have a drop ship order processing team that works 24 hours a day, seven days a week for $800 a month?  Probably not, but this is what OPAL, an Autonomous Order Processing Solution gives you.  And, you do not need to have a one size fits all solution.  In fact:

  • It adapts to your specific business rules and processes
  • It works transparently with all of your retailers and e-tailers to exchange mandatory electronic information and create compliant Packing Slips
  • It works transparently with your e-commerce shopping carts to process orders and communicate shipment tracking to your customers
  • It works with your Accounting and Inventory System to create accurate invoices and decrement inventory without manual entry
  • It works transparently with your primary shipping carriers such as USPS, FedEx, UPS, DHL, etc. without having to use 3rd party software for shipping and labels or going to one of their portals.
  • And, it works effectively with and optimizes your warehouse or 3PL. 

So, think about it for just a moment.  $800 a month ($9,600 a year) as opposed to $15,000-$20,000 per year plus overheads for one person to handle order processing.  And this one individual will not be processing your orders 24 hours per day, 365 days per year.  

If you add order volume to the equation, how many orders per month can one person really handle?  If it’s 1,000 then your labor cost per order is probably going to be at least $3,000 ($3.00+ per order) versus $.80 with OPAL ($800 divided by 1000 orders).  And, the more orders processed each month reduces this per order cost even more.

 Are you striving to achieve productivity gains to increase drop ship order profitability?  Before dismissing the possibilities, please contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business. Book your FREE Demo now.

The ROI of Autonomous Order Processing

We’ve talked extensively in the past about the productivity gains and increased revenue potential through the use of Autonomous Order Processing, especially as it relates to the huge, positive impact it has on drop ship order profitability. 

But, many times, business owners are reluctant to even consider the potential cost to their business – so much so that they don’t even investigate it to see if it is viable.  And, sometimes if they do, they have serious sticker shock and dismiss the idea.  However, what’s often not considered is the very fast Return on Investment (ROI) that is achieved and how quickly that increased profitability and productivity comes to pass for your company. 

Yes, it’s not free.  An Autonomous Order Processing System is NOT a one size fits all solution and it needs to work with a lot of moving parts within your business, like:

  •           It must adapt to your business rules and processes
  •          It must work transparently with all of your retailers and e-tailers to exchange mandatory electronic information and create compliant Packing Slips
  •          It must work transparently with your e-commerce shopping carts to process orders and communicate shipment tracking to your customers
  •          It must work with your Accounting and Inventory System to create accurate invoices and decrement inventory without manual entry
  •          It must work transparently with your primary shipping carriers such as USPS, FedEx, UPS, DHL, etc. without having to use 3rd party software for shipping and labels or going to one of their portals.
  •          And, it must work effectively with and optimize your warehouse or 3PL. 

So, for example, let’s say that you have to invest $10,000 to connect all of those moving parts discussed above.  Sounds like a lot doesn’t it, but you REALLY need to consider the following: 

  1. I don’t know what your current per drop ship order processing cost is, but in my experience it runs at least $3 per order in labor cost.  At a run rate of around 1,000 orders that would be $3,000 per month.  With Autonomous Order Processing it would be $.80 or $800 per month.  A savings of $2,200 and an ROI in 4 to 5 months. 
  2. Also, if you are growing, as I’m sure you are, and have the need to add personnel to manage the load at some point, Autonomous Order Processing eliminates the need to hire additional personnel.  A savings of $15,000-$20,000 plus overheads each year.  Once again, the cost of one additional hire more than covers your investment. 

Before you dismiss the possibilities out of hand, contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business, while also paying for itself extremely quickly.  Book your FREE DEMO now. 

Tags :

The Drop Shipment Train is Coming

“Tis the Season” and if you are one of those businesses that experiences extremely high order volume during the holidays you may be looking for that light at the end of the tunnel following Christmas.  Unfortunately, that light may be a train! 

The Black Friday statistic for 2017 were pretty interesting.  Foot traffic in retail stores stayed pretty steady, dropping at most by 1-2% while on-line shopping increased by over 16% according to CNN Money.  Some of the big winners between Black Friday and Cyber Monday were Amazon, Walmart and Target – all retailers that have embraced the on-line, ecommerce, drop shipping business model.  There was also a statistic reported that Amazon managed over 700 ORDERS PER SECOND.  WOW!

The on-line, ecommerce world with its inherent need to drop ship directly to consumers has been experiencing double digit growth year-over-year for a while now – it’s apparently unstoppable.   So, the question is, how many seconds does it take you, as a supplier, to process a drop ship order?  It’s pretty clear that there are going to be more and more each year.  Are you going to be able to keep up? 

To compound matters, expectations are getting higher and higher regarding supplier performance.

If a consumer orders 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 want their suppliers to drop ship from their own warehouse rather than one of their fulfillment centers, provide acknowledgement, tracking number, ship it in a maximum of one to three days, provide accurate invoicing and provide them with accurate item inventory updates on a frequent basis.

Unfortunately there aren’t a lot of good tools to automate this and make it feasible to really fill all of the orders you possibly can without adding a bunch of seasonal staff.  Much of what is available is cumbersome, requiring you 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.

This dramatic supplier need led to the creation of OPAL (www.meetopal.com), 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.  How many seconds and how many people do you currently need?

Managing EDI and Other Financial Impacts on Drop Ship Orders

Unlike bulk orders worth thousands or hundreds of thousands of dollars, drop ship orders are problematic in terms of managing your cost components well enough for a product to be profitable, especially when it’s retail price is less than $40 or $50.

A lot of operating costs can severely impact your profitability:  The manufacturing of the product, warehousing, EDI costs associated with communicating with your Trading Partner, order processing handling by staff, pick, packing and shipping by the warehouse, and the technology investments needed like an ERP or simple inventory and accounting system, shipment scheduling / tracking tools, etc.

To complicate things, drop shipping is becoming a preferred business model for many traditional brick and mortar retailers, in addition to the many e-tailers that have already shaped the e-commerce market over the last few years.  For suppliers, this will mean an exponential increase in small orders to process, shorter and shorter acknowledgement and shipment deadlines and more and more staff to keep up with the load.  And, of course, there’s the retailer commissions charged for allowing you to sell on their marketplace.  All of which impact profitability on drop ship orders even more.

So, what can you manage?  Well, from a retailer perspective, there’s not much you can do other than ensure that they are complying with your Minimum Advertised Price (MAP) Policy to protect your margins and brand.  And I’m sure that you have already and are continuing to reduce costs in your supply chain, and have probably optimized your warehouse operations and / or negotiated the best cost possible with your 3PL.

So what’s left?  EDI charges and order processing costs!  These alone are commonly more than $5 per order!  That’s at least a 10% margin loss on a small order.

Depending on your drop ship order volume this $5+ cost can be reduced to $1 or significantly less with OPAL.  That’s a $4 gain per order without even trying.

If you are doing a great deal of drop shipping to customers and are struggling with the cost of EDI when doing business, please take 15 minutes of your time to view a demonstration of OPAL so that we may answer your questions and see how it can solve the problems you are encountering and improve efficiency and profitability. 

OPAL is an autonomous, cloud based order processing and fulfillment solution and works 24 hours a day, 7 days per week, even when there’s no one in the office.  It works with and enhances your ERP investment and automates drop ship orders – processing them in less than 8 seconds – and prepares all of the necessary information, packing slips and shipping labels necessary for a warehouse or 3PL to pick pack and ship the order.  It even tracks the order and notifies you when there’s a shipment issue.  All without any EDI costs or additional software tools.