Whether you are new to selling on marketplaces such as Amazon or Walmart or are an experienced seller, expanding your product catalog can help your ecommerce business remain competitive and grow. However, expanding your online offerings without making a large investment in inventory has always been a challenge. Fortunately drop-shipping makes it possible to dramatically ramp up your product offerings with little or no upfront investment.
First, let’s define drop-shipping. Drop-shipping is an arrangement between you (the seller/retailer) and a drop-shipper (wholesaler or manufacturer) in which the seller post products for sale on Amazon, Walmart or other marketplaces, and orders are fulfilled and shipped directly from the manufacturer or supplier to the buyer.
The retailer buys a product from a wholesaler only after a customer buys it from the retailer’s online store. A retailer is never required to purchase or warehouse any products in advance of the sale. They are simply responsible for sourcing, marketing and selling the product.
What makes drop-shipping such a good financial arrangement for retailers is that a retailer only buys a product from a wholesaler after a customer buys it from the retailer’s online store. A retailer is never required to purchase or warehouse any products in advance of the sale. They are simply responsible for sourcing, marketing and selling the product.
Although drop-shipping is not a new business arrangement, there are now online tools that make it relatively easy to connect the product information in the databases of manufacturers & suppliers with sellers seeking to sell products they do not have to purchase in advance.
If you are looking for recommendations for a drop-ship solution provider for your eCommerce store, here are 4 questions you will want to ask:
- Does your drop-ship solution provider connect to all the major online channels like Amazon, eBay & Walmart?
Not every drop-ship solution provider can automatically list the drop-ship inventory to the major e-commerce marketplaces. When selecting a drop-shipping platform, be sure to choose one that can automatically list the drop-ship products to the major marketplaces such as Amazon, eBay, Walmart & Jet. Many solution providers can import orders from the marketplaces to your suppliers, but not every drop-ship provider can proactively list your products to all the major e-commerce marketplaces. Be sure the drop-ship provider you are working with can automate drop-ship data in both directions.
- Does your drop-ship solution provider offer automatic repricing functionality?
If you are selling products on Amazon or Walmart.com that are being fulfilled by a drop-shipper, the chances are that other retailers are selling the same products there as well. When selecting a drop-ship solution provider, be sure to select one that offers automatic repricing functionality. This means that a platform should be able to look at the identical products on Amazon & Walmart from competing sellers and automatically underprice them without going below your price floor so you can outsell your competitors without compromising your profit margins.
- Does your drop-ship provider automatically maintain your margins as the cost of your products change?
Even if you are not using an automatic repricer to compete against other sellers, the cost of your products from your drop-ship suppliers may periodically change. If you sell these products at fixed prices on Amazon, eBay or other marketplaces, you run the risk of seeing your margins shrink to unacceptable levels or even vanish. When selecting a solution provider that will enable you to sell on Amazon & other marketplaces, be sure to choose a solution that allows you to set your minimum profit margins. Therefore, your sale prices automatically fluctuate with changes in the cost of the products from your wholesale or manufacturer dropship partners.
- Does your drop-ship provider automatically feed tracking numbers back to the marketplaces like Amazon, Walmart.com and eBay?
One of the conveniences of using a drop-shipper is that you no longer have to handle shipping and fulfillment. As orders flow from Amazon, eBay, Walmart or wherever else you are selling, your drop-ship partner handles all fulfillment and shipping. However, once the product ships, you need to make sure the tracking number is transmitted back to the marketplace in a timely manner, which they in turn will share with the buyer. When selecting a drop-ship provider, be sure to pick a solution that automatically feeds tracking numbers back to the marketplaces.
The use of drop-shipping as a method of fulfillment with selling on e-commerce marketplaces enables you, as the retailer, to combine the best of 2 worlds. With drop-shipping, you can sell products you don’t need to buy or store to millions of potential buyers who are looking for these products on sites like Amazon, Walmart, eBay and others.
A solution provider that connects drop-shippers to all of your e-commerce channels should be able to do so in two directions: listing products from your drop-ship providers to marketplaces like Amazon & Walmart, and then feeding orders from those marketplaces back to the drop-shippers. Be sure to select a solution provider that can automate the entire exchange of data across all your suppliers and marketplaces.
To learn how you can use Solid Commerce to connect drop shippers to your online store, click here