Persuading Your Supplier to Drop Ship

The Checkout
Once the visitor has made a commitment to purchase a selection of goods and services from you, he or she has to go through the checkout. The checkout process is a continuation of the basket or cart metaphor that we met in the e-commerce category. Once a visitor has passed through the checkout, we call them a customer.

In fact, an online checkout process is little more than a glorified data capture operation. It’s at this stage that we ask the customer for their billing and shipping addresses, and their credit card information. Once we have that information, we can proceed with validating that the customer has the means to pay, and that we have the ability to send the goods to them. Therefore, in this article we’re going to discuss about Drop shipping

Drop Shipping

Drop shipping is the term given to the process of asking your suppliers to ship goods to your customers on your behalf. In this model, the retailer doesn’t keep stock (or keeps very little stock) and relies on the stock management and distribution skills of its suppliers to satisfy orders the customer places.

In, we’ll be assuming that Rony’s suppliers have agreed to drop ship, so that Rony can concentrate on maintaining the site and creating a sense of community with his customers. However, there’s a lot of code that needs to be implemented so that we can acquire the customers details and their orders, and then pass them on to the relevant supplier, which is what we will be discussing in this and the following category.

Persuading Your Supplier to Drop Ship

As a small retailer, we do not have the cash to buy a lot of stock. This means that, in the offline world, we could only hold stock of a select number of machines – in other words, we couldn’t sell every machine by every manufacturer, nor could we hold enough stock to satisfy all of the orders we were able to get. Or, if we did, our operating capital was affected, making our business less resistant to change.

However, suppliers can hold stock of an entire product range or ranges, and they can hold enough to meet demand. As long as we pay the suppliers for their shipping costs, it makes no odds to them if they ship directly to our customers or to us exclusively.

Purchasing products on the Internet is often cheaper than doing so from a store, because the overheads to run an online store are less than those to run an offline store. Rony has to rent his offline store and buy stock to sell in the store (some of which is slow selling and will sit on the shelves for several months). If his suppliers drop ship to his customers, he only has to worry about maintaining the Web site, as stock will not be bought until it is needed. The only increase in costs occurs in shipping costs (as the supplier has to make lots of small shipments instead of a few large ones); however, the customers themselves usually pay for the cost of shipment as an additional charge.

Another reason why products are often cheaper on the Internet is because e-commerce sites usually significantly reduce their profit margins on each product, in the hope of gaining market share.

Our customers never directly raise customer service queries with the supplier – the retailer remains their first line of support. In addition, our supplier doesn’t have to deal with the risk of selling to our customers – we still pay the supplier even if the customer turns out to be making a fraudulent order.

However, we are still sending a large number of orders through its system. At this point, we’re still making phone calls or sending faxes – we’re not actively reducing administration costs in the supplier’s organization.

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