Order fulfillment and a smooth supply chain are the pillars of a dropshipping business. It is an interlinked phenomenon, if the product is not manufactured on time, it will not be distributed on time and if not distributed on time, it will not be delivered on time to the consumer.
We all can see that the dropshipping process starts with the customer placing an order and ends with doorstep delivery of the same product. So who is in the process? What is the supply chain for a dropshipping business? You cannot start a business without thinking to its core and similar is with the dropshipping business. Let’s talk about the supply chain to its core.
Key Players of the Dropshipping Supply Chain
1. Manufacturers
Manufacturers are the very first player in the dropshipping supply chain. They source the raw materials, manufacture a product and give it the finish to sell it in the market. Production is done in tons, is sold to various suppliers and sometimes retailers at lesser rates.
It is not a myth that buying from a manufacturer directly and then selling products at retail prices is the cheapest way for doing a business but this has its own challenges. One must meet the minimum purchase requirements (fixed either in quantity or price) plus the buyer has to look for a warehouse to store the tower and then re-ship as and when the customer makes a purchase.
2. Wholesalers
As said above, suppliers or wholesalers purchase the product in bulk from the manufacturer and then store it in the warehouses. Retailers then make a purchase to re-sale the product to the end consumer. Suppliers usually buy from a dozen of manufacturers (without branding) from a particular dropshipping niche.
In dropshipping business, suppliers directly ship the product to the end consumer. This is the sole reason why sellers rely vividly on the dropshipping business model – no capital cost, no storage cost, and no inventory management.
With digitalization, dropshipping has become the most promising business of its time for small sellers. Know what is dropshipping and its benefits. Mostly, the wholesalers obsessively stick to the wholesale model and sell only to retailers and not to the general public.
3. Retailers/Sellers
The last player in the dropshipping supply chain – the seller. The seller establishes a store, displays the product, and sells to the end-consumer (upon purchase). Now that digitalization and technology both are at their peak, a retailer with the help of a professional web development company can easily open an online store for consumers to make a purchase from the convenience of their own homes.
In dropshipping business, the seller displays the product, the consumer makes a purchase and the order is diverted to the supplier for further processing.
For a seller, it is mandatory to select a dropshipping niche that is sustainable, trending, interesting, and profitable. Based on the niche, website development, digital marketing, content marketing, and SEO could be done. Here is the comprehensive guide to dropshipping niche, digital marketing, and SEO for your online business growth.
Dropshipping is not a designated role
As we read above, there are three crucial players in the dropshipping supply chain – manufacturers, wholesalers, and retailers. But, dropshipping is not the designated role of the wholesaler only. Here the supply chain differs based on the situation and profit margins.
In some cases, the manufacturer is willing to act as a dropshipper and ship the product directly to the end consumer eliminating the need for the wholesaler. Similarly, a seller can offer to drop ship to the end consumer but this is not profitable as it isn’t buying directly from the manufacturer plus there is a cost for storage, shipping, and inventory management.
Please Note: A “drop shipper” never claims wholesale pricing, the only job here is to ship the product to the end-consumer on your behalf. To get the best prices and keep a good margin for your products make sure you are dealing with the authorized wholesaler or the manufacturer.
Dropshipping – The Ordering Process
Now that we know the key players in the supply chain, let’s take a look at how the product reaches the end consumer. What is the ordering process? And what is the process of door-step delivery?
This is how it goes….
For instance, there is an online store “Smartphone Shop” – the store selling smartphone accessories and a mobile accessories wholesaler “Mobile Accessories Wholesaling”.
Here is the standard ordering process for the above example:
Step-1 Customer Placing an Order at Smartphone Shop
A consumer needs a smartphone cover to protect his smartphone from breakage. He will search online and land on the home page of the Smartphone Shop. He looks for the best option and places an order.
1. The smartphone shop will notify the customer via a message or an email or both (there is usually an automated software for the purpose).
2. The customer pays for his order at website checkout. The amount will automatically be credited to the Smartphone Shop’s bank account.
Step-2 Smartphone Shop directs the order to its supplier (Mobile Accessories Wholeselling)
The Smartphone shop (seller) will then forward the email of order confirmation to Mobile Accessories Wholeselling (supplier). Email is the most common way to trade with dropshipping suppliers.
The supplier has the seller’s credit card on file and will charge for the product pricing plus the shipping charges or processing fees. Every order has a tracking number.
Step-3 Mobile Accessories Wholesaling ships the product to the end consumer
After the seller placing the order via e-mail, the supplier will see the said availability and if the item is in stock then he (the supplier) will charge from the seller’s account. The product then is packed and shipped to the end consumer.
The entire dropshipping process is often fast. Most of the quality suppliers are able to dispatch the order within hours of confirmation, this is the reason why merchants advertise same-day or next-day shipping for consumers.
Step-4 The Smartphone Shop sends the message to the consumer confirming the shipment
Once the seller receives the tracking number, he can give the customer a real-time check on the order shipment.
Most often the real-time tracking system with order numbers integrated into the store web interface for the customer to directly go back to the website and track the shipment status.
With door-step delivery of the order to the end consumer, payments confirmed and the customer notified, the order fulfillment process is complete.
The Store Represents the Experience
In dropshipping business, the face of the entire process is the seller. The customer knows the seller and perceives that everything is happening under one roof. In most cases, the product that reaches the doorsteps of the consumer has the seller’s branding and address (for return). This makes the drop shippers invisible to the end consumer. No matter you are planning for a dropshipping or a retail business, your store’s logo will have a never-ending influence on your goodwill on a professional level. Even a logo sometimes becomes a status symbol or a symbol of quality that fetches more sales for the company. Leverage the powers of the best logo designing firm for your store’s logo.
In case the wrong product or the damaged product reaches the doors of the consumer, then he will consult with the seller’s company which would then coordinate with the supplier or manufacturer.
In dropshipping business, the wholesaler or the manufacturer is invisible to the end consumer. Their responsibility is to produce, stock, and ship the dropshipping product. Apart from manufacturing and stocking, other tasks such as digital marketing, web development & maintenance, and customer service – is the seller’s arena.
In the End
Dropshipping is undoubtedly a lucrative business opportunity for a seller, provided that you own the interactive website, hire the result-driven digital marketing strategies, and give the best user experience to your clients. Being a seller of digital resonance is your ultimate asset – the appealing logo, a website, digital marketing, and customer service.
Hiring an IT Outsourcing company is your best bet here. Every business seeks investment but an online dropshipping business is comparatively easy on your pockets if you hire the help of potent web development and digital marketing firm.
From logo designing to web development and digital marketing, Vervelogic has got your back. All you have to care about is your dropshipping supply chain and the fulfillment process.
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