Product overlap is when you have the same product SKU available to be sourced or shipped from multiple locations. This might be your own warehouse, your brick-and-mortar store, or a dropship supplier’s warehouse. This presents multiple options when determining where you can ship it from and more considerations on why you might ship a product from one location or another in your dropship automation strategy.
For example, in the simplest scenario, you might always want to ship from your own warehouse unless you’re out of stock. If you’re out of a product, you’ll set a rule to send the order to a dropship vendor. However, if the customer is within X miles from the vendor, or if the package weighs over X pounds, you might want to change the shipping source.
You can’t truly automate the full order fulfillment workflow without addressing the order routing piece. And because there can be so many things to consider in this piece of the puzzle, you can see how a rule-based order routing engine accompanied with the relevant data (ship-to and -from locations, estimated shipping costs, product costs, dropship fees, etc.) is the only way to automate.
While you don’t have this problem if you don’t have product overlap, you’re missing out on the opportunity to improve your customers’ experience, lower shipping costs, and drive more sales through increased inventory availability and expanding your product catalog.
Trust us, this is next-level Jedi trick stuff. Check out how Flxpoint handles multi-source order routing here.
5. Rule-Based Listing Management
Moving on to “rule-based” dropship automation, it’s worth noting again that having the relevant data to create these rules is vital. This data is required to accomplish not only the order routing, as mentioned above but the listing management piece we are about to get into.
Unlike the data required for proper order routing that you can set up via manual entry or API integrations (shipping costs, dropship fees, locations, preference rules, etc.), the amount of ongoing data management required to automate rule-based listing management can vary.
The following are the three primary processes in the rule-based listing management workflow:
- Pricing products
- Listing new products
- Delisting existing products
All three processes require you to have specific, reliable data points to create dropship automation rules you can trust to automate your business. Let’s dive into each of these processes individually.
Pricing Products
The ability to automatically price products typically depends on receiving accurate cost, MSRP, MAP, and other pricing data from your supplier. How much it can factor into your ability to scale varies greatly by the supplier.
Some suppliers change their costs daily. For others, it’s a quarterly or even annual update.
Because some suppliers have stricter MAP restrictions than others, they may modify that number more often.
Listing New Products
Listing new products is the ability to automatically identify new products available from your suppliers, quickly modify and augment the product data to fit your ecommerce product assortment, and list them to your store.
The benefit of this is apparent for most retailers. With an efficient way of getting new products to your customers, you’re able to capitalize on more sales, beat your competitors to market on the latest trends, and establish a brand known for having the newest and best products.
However, this greatly depends on the product data provided by your supplier. You likely don’t want to use the exact product title, description, etc., that your supplier has provided through a product data feed. However, having images, categories, and even attributes can greatly speed up adding new products to your e-commerce store and other sales channels.
Further, having a rules engine that will allow you to automatically manipulate or “map” the incoming project data into a centralized format or outgoing data can save you a ton of time if your supplier is regularly adding new products. An example of this would be setting up rules to automatically map the supplier category “Camping Products” to your store’s “Camping and Outdoors” category.
It’s best if you can leverage an ecommerce operations platform that allows you to automatically “push” products to your sales channel, rather than manually uploading directly to the channel and then syncing back.
Delisting Existing Products
The most common use case in delisting products is pulling down products out of stock, as discussed in stage two with inventory syncing.
In this stage, we’re mostly talking about leveraging product data to delist or prevent listing to certain channels based on that data and the rules that leverage it. Here are a few common rules we see:
- Set any product in the “hot sellers” category with a quantity below five to delist (so you don’t risk a stockout)
- Delist products on the Amazon channel only if the warehouse quantity is out of stock, but dropship supplier quantity is in stock.
6. Accounting and Reporting Automation
Dropshipping has gained in popularity because it adds competitive advantages to retailers that can manage the added complexity.
However, this complexity causes some retailers to view dropshipping negatively because they don’t think it’s possible to overcome it. The sheer number of purchase orders you send—and invoices you receive—when dropshipping makes reconciling POs to analyze and ensure profitability significantly more challenging.
Most of the challenge comes from purchasing an item after you’ve already sold it. There can be surprises relating to both item and shipping costs. To make it even worse, you may not know if an order is profitable for several weeks if your supplier invoices in net 7, 14, or 30 terms.
You can mitigate shipping cost unknowns by shipping off your own carrier account for dropship automation. However, you may want to take advantage of a large distributor’s shipping rates—or in some cases, the supplier may require that they ship and bill you for the charge later.
You’re obviously at much more risk of these potential issues when dropshipping than when you’re selling goods that you’ve already purchased out of your own warehouse. The only way to truly minimize these surprises is to implement smart software and systems while working with trusted suppliers that have their own systems and processes in order.
So, the obvious first step is to automate the reconciliation of invoices to POs and reporting and ensuring profitability of each order, right?
Wrong.
Why? Because suppliers often have disparate and archaic invoicing methods, which makes it difficult to automate. It’s easy for retailers to give up and move on to the next task.
So How Do You Automate Accounting and Reporting?
If your supplier doesn’t offer invoices via EDI (or doesn’t allow it to be set up initially), you’re often faced with receiving PDF invoices via email or downloading them manually via your supplier’s reseller portal.
If you’re lucky, they might provide invoices in CSV format export—even luckier, a CSV file emailed to you as an attachment.
Like the conversation with your suppliers in the first automation stage regarding the options they allow for accepting orders, you’ll want to have another conversation about potential options they can provide when sending invoices.
In an ideal scenario, they can send the invoices in CSV format that you can automatically map into your ecommerce operations platform (and automatically reconciled). However, the most common scenario we observe at Flxpoint is the supplier providing a PDF with line-itemized invoices emailed daily or weekly.
The second use case is why Flxpoint offers a PDF automated conversion service to help automate this typically manual, grueling process. In this scenario, your supplier emails the invoice PDFs to you and your dedicated Flxpoint invoice automation email address (i.e., customer-a-invoices@myflxpoint.com). When the software receives the email, it converts it to PDF, imports the data into the system, and auto-reconciles to the PO to allow for profitability reporting.
The ideal scenario is 810 EDI invoices from your supplier, but this isn’t always possible and requires custom development.
7. “True” Dropship Automation
Only after you’ve made your way through each of the preceding stages of dropship automation are you considered “truly automated.”
If you don’t have one or more of these operations automated or managed in separate systems, you won’t have enough data to automate your operations fully.
You don’t need to implement a behemoth ERP and manage everything from one single system. But bringing all your data into one system to allow it to be leveraged in your automation rules is imperative to true automation.
Imagine the dropship automation possibilities if you have everything from product data like categories and attributes to order profitability, supplier fulfillment rates, order details, warehouse locations, and more in a single system.
.svg){kind=icon}
