Dropshipping means that your product is shipped directly from the manufacturer or wholesaler to you. From the moment someone orders your product, to the time it arrives in their hands, they don’t even touch or see it. This may cause entrepreneurial FOMO. But for some brands, it is worth considering.
Shipping straight from A to B can help you save time, money, and organization on how you store, pack, and ship your inventory. Dropshipping is a great way to keep your staff and your space small while still retaining your flexibility, which is the greatest asset of any small business. Here’s the catch.
There are many potential problems when you have another company involved in your business. You are responsible for any customer-facing problems with your product, including packaging and timeliness. These are the rules of entrepreneurship. It’s up you to decide whether your business is a good fit for dropshipping, and if the pros outweigh the cons. Talking to your supplier about dropshipping is a good place to start. What can you do to find out if your supplier drops shipping? Ask them! These are some great icebreakers to help you get started.
- Are you able to provide what I need at the right price?
- Do you drop ship?
- Do you have permission to use my packaging?
If you already have suppliers, the answer is yes. Dropshipping is not something that your supplier is open to. Dropshipping is a process that requires its own infrastructure. If your supplier doesn’t offer drop shipping, it’s difficult to convince them. You can outsource fulfillment if your supplier refuses to dropship.
There are many questions you should ask when researching dropshipping suppliers for your eCommerce store.
This list of questions is meant to be a guideline, not a complete list. We cannot cover every scenario that could arise as you start your research on potential product partners.
Dropshipping Cost
Dropshipping is not sustainable. It doesn’t really matter how much time it saves. Let’s begin by looking at the drop shipping fees of your supplier to determine if drop shipping is worth it.
Dropshipping may be charged by your supplier at a flat rate per parcel, or you may need to pay a higher pricing structure. Sending a test case is the best way to be sure how much you will pay. Take this example:
Enamel pins are made by me and shipped in 6″x6″ mailers. Each package weighs 1 lb. What would it cost to send packages to Texas, California and New York?
Although it sounds like a 7th-grade math test, this is a direct way to find out how much drop shipping costs. The more surprises you have, the better.
You can compensate for dropped shipping costs on the customer’s side by increasing the cost of your products and/or your shipping. Because customers love the convenience of free shipping, some businesses will increase their product costs. Flat rate shipping is offered by some businesses for all inventories. Some businesses charge per item shipping fees. Although there is no universal solution, a general rule of thumb is to set a target blended margin which will keep your business viable.
Dropshipping allows you to spend your time on other areas of your business and it’s the best place to find the greatest value. You can spend less time fulfilling orders and more time marketing, operations, and content. This will allow you to bring in more customers.
Your supplier relationship
Dropshipping means that your supplier will touch the product only once it has been signed, sealed and shipped to you. It is best to establish a relationship offline. If you have the opportunity to meet face-to-face to discuss your business, the passion for your brand, product, , and packaging will be evident. They’ll also take the time necessary to ensure it is perfect. Handshakes are better than e-mail signatures every time.
You can even use online services such as Drop shipping with Shopify or ChannelApe to manage your inventory and order logistics. This will allow you to have greater transparency between yourself and your supplier.
Dropshipping brokers may be a possibility if you are looking into dropshipping. They can connect you with thousands of manufacturers who are willing to dropship and will negotiate and manage the relationship for your benefit. Our rule of thumb is to stay close to the source. So that there are fewer people and more transactions between you, the manufacturer and your customer, it is worth negotiating your own deal.
Can I dropship and use my Lumi packaging?
Absolutely! Yes. Most suppliers will ship your packaging materials to their warehouse. However, it is important to make sure this is part of the agreement. It’s easy to get your packaging materials to your supplier by checking out on Lumi.com. Your supplier will receive your chosen packaging so that they can send each product out exactly as you would.
Remember that drop shipping is invisible to the customer. They have faith in your business’ ability to deliver what they ordered. They expect their order to arrive on time and in the correct form. That’s it. It’s possible to switch to drop shipping if the cost of fulfillment in-house is greater than the cost of drop shipping. Dropshipping is a great way for your business to remain flexible and adaptable without having to make major changes.
Is the supplier willing to work with dropshippers?
Dropshippers are not for everyone. Some companies prefer to sell wholesale and require higher minimum orders.
You might not find other suppliers that can fulfill your orders individually, offer blind branding, or offer dropshipping options. It’s best to get this information right away so you can quickly research other suppliers.
If they do work with dropshippers, you will want to answer the following questions.
Are They Ready to Do Business with a First-Time Business Owner
Dropshipping suppliers are open to working with any business that is legitimate, although they might have different requirements depending on your business’s history.
They may, for example, offer different terms to eCommerce owners who have a better track record than new eCom owners who are just starting their own business.
If there are differences between how they work with different types businesses, you will want to find out how they will work with your business.
Questions to Check Company Background
You should do your research on any potential supplier that works with dropshippers. There are many scammers in this industry, so make sure you trust them with your business.
These are the most important questions you can ask to confirm their background.
- How long have they been in the business?
- Could they give you some references?
- They can provide a company registration #
- Are there any ratings and feedback available online?
- Are you looking for reviews on the company or products of this company online?
- What is their response time to inquiries/questions?
- What do you think about their responsiveness, both in terms of the time it takes to get a reply and the quality of their replies?
What Dropshipping Options Does the Supplier Offer?
Dropshipping is not the only option a supplier may offer. There are many service levels they might offer.
You will need to find out if they have minimum sales requirements.
It’s also important to learn things such as:
- Are they able to offer blind branding? Blind product brand, shipping boxes, and labels are available so your customers don’t know who’s fulfilling their order.
- Are they able to track your customer’s movements so you can send that information to them?
- Are they willing to accept refunds directly?
- What are their methods for dealing with quality concerns and any questions?
What are their payment terms?
As we have already mentioned, different suppliers might require or offer different payment terms in order to work with them.
You may not be able to work with certain payment options due to differences in their terms.
These are the questions you will need to answer:
- Are there minimum orders and/or sales requirements to continue working with them. If yes, what amount and for how long?
- What are the requirements for payments and when should they be made?
- Are you able to pay each order as it is placed? Or do you have to pay one bill per month or another time period?
- Do they accept credit cards or bank wires?
It is also important to ask if there are any additional costs for dropshipping other than the regular product and shipping cost. Some suppliers will dropship for you, but only for an additional fee.
Can they meet your inventory and shipping time needs?
Dropshipping is an option offered by many suppliers, but you need to make sure they can fulfill your product selling volumes and shipping times.
There are many factors at play here. It’s crucial that you fully understand them, especially if your goal is to sell lots of products fast.
You need to find out if they are able to get your product to you quickly, and how much they can handle.
These are the most important questions that you should answer as a guideline:
- What inventory does the company have?
- What are the other sellers selling these products?
- How long will they take to replenish stock?
- Do they notify you when they are close to selling out, and/or when they do?
- Are there safety measures in place that ensure they don’t run out of stock, regardless of how fast the products sell?
- What is the shipping time for products once you have placed your order?
- What are their shipping times
Do you have quality product information from the supplier?
You will need to have accurate information about each product in order to create product descriptions when you start working with new products.
It’s important to check out the descriptions and images that they offer. You’ll want to create your own descriptions and upload your product photos and videos to make your product stand out. But it makes your job much easier if they give you solid product information right from the start.
Are You able to brand the products you want to sell?
If you don’t plan on selling your own brand of products, this option is not necessary.
Offering your own line of branded products is one of the best ways to increase your sales margins.
If you feel that this might be an option in the future, it’s worth asking if branding the product, packaging, instructions, and any other inserts is possible.
Is their system compatible with Dropshipping Automation Apps
An automation app such as Dropified will help you to automate a lot the tedious tasks involved in running a dropshipping business. If you have one, it is important to find out if the shipping process/system can be integrated with your automation application.
Dropshipping suppliers often have an API connector which allows you to connect their shipping system to your automation and selling systems. This will allow you to automate many tasks.
It is important to find out if the system can automate your tasks.
- Tracking information for shipment tracking that is automatically sent to your customers
- You can set up inventory alerts to notify you if your inventory is low or out of stock so that you can adjust promotions accordingly.
If the system they use does not integrate with your automation application, you will need to calculate how much of your sales must be done manually in order to account for the manual labor costs involved with fulfilling this way.
Drop shipping costs
Drop shipping is not sustainable. It doesn’t really matter how much time it saves. Let’s begin by looking at the drop shipping fees of your supplier to determine if drop shipping is worth it.
Drop shipping may be charged by your supplier at a flat rate per parcel, or you may need to pay a higher pricing structure. Sending a test case is the best way to be sure how much you will pay. Take this example:
Enamel pins are made by me and shipped in 6″x6″ mailers. Each package weighs 1 lb. What would it cost to send packages to Texas, California and New York?
Although it sounds like a 7th-grade math test, this is a direct way to find out how much drop shipping costs. The more surprises you have, the better.
You can compensate for dropped shipping costs on the customer’s side by increasing the cost of your products and/or your shipping. Because customers love the convenience of free shipping, some businesses will increase their product costs. Flat rate shipping is offered by some businesses for all inventories. Some businesses charge per item shipping fees. Although there is no universal solution, a general rule of thumb is to set a target blended margin which will keep your business viable.
Drop shipping allows you to spend your time on other areas of your business and it’s the best place to find the greatest value. You can spend less time fulfilling orders and more time marketing, operations, and content. This will allow you to bring in more customers.
Your supplier relationship
Drop shipping means that your supplier will touch the product only once it has been signed, sealed and shipped to you. It is best to establish a relationship offline. If you have the opportunity to meet face-to-face to discuss your business, the passion for your brand, product, , and packaging will be evident. They’ll also take the time necessary to ensure it is perfect. Handshakes are better than e-mail signatures every time.
You can even use online services such as Drop shipping with Shopify or ChannelApe to manage your inventory and order logistics. This will allow you and your supplier to have greater transparency.
Drop shipping brokers may be a possibility if you are looking into drop shipping. They can connect you with thousands of manufacturers who are willing to dropship and will negotiate and manage the relationship for your benefit. Our rule of thumb is to stay close to the source. So that there are fewer people and more transactions between you, the manufacturer and your customer, it is worth negotiating your own deal.
Can I drop ship and use my Lumi packaging?
Absolutely! Yes. Most suppliers will ship your packaging materials to their warehouse. However, it is important to make sure this is part of the agreement. It’s easy to get your packaging materials to your supplier by checking out on Lumi.com. Your supplier will receive your chosen packaging so that they can send each product out exactly as you would.
Remember that drop shipping is invisible to the customer. They have faith in your business’ ability to deliver what they ordered. They expect their order to arrive on time and in the correct form. That’s it. It’s possible to switch to drop shipping if the cost of fulfillment in-house is greater than the cost of drop shipping. Drop shipping is a great way for your business to remain flexible and adaptable without having to make major changes.
