Effective Drop Shipment Process

[beautykat]

Does anyone has any idea how to effectively conduct drop shipment? We have a supplier who is willing to collaborate with us on a 'drop shipment' basis. But we see a lot of logistic issues with it.

For example, do we process payment via our gateway? Or do we send them to my suppliers website?

Do we ship out all items in one shipments? I am sure customers will not be too happy receiving multiple shipments while placing one order. Besides, the total s&h cost will be higher with multiple shipments.

Would appreciate if someone can shed some light in this.

[jwurunner]

Hi,
We do a lot of drop shipping from various suppliers and have found that the customers don't mind mutiple deliveries as long as the products are delivered fairly prompty.
We do all the order and payment processing on our end. This way all information received by the customer has our name (i.e. credit card bills, email, etc..). This keeps chargebacks and confusion to a minimum.
As for shipping and handling charges, the way we do it is by product. We carry about 80% of the items that we sell in our warehouse. For the other 20% we mark them up and then add the drop ship fees from our vendors to the retail price. This way if a customer orders 2 items from 2 different suppliers we are covered. We do not charge shipping for our orders (we build the freight cost into the price).
We have had this system in place for 7 years now and it still work great.

Hope this helps

-jwurunner

[beautykat]

jwurunner,

Thanks for the insight. Our supplier is proposing that we do drop shipment with them. Other than lower upfront inventory cost and risk from our end, but we do not see much advantage to this method. Care to share some thoughts on why your company is doing drop shipment?

[jwurunner]

beautykat,

We carry around 15,000 skus of which we stock approx 3500 of them. We use drop shipping for the slow movers to keep inventory in check. We find that we back less mistakes per 1000 packages than our vendors so as an item hits a certain threshold we start stocking it. We also find that we can buy at a lower price when we stock and we save on handling fees vs the cost of the payroll for the warehouse.

-jwurunner