Dropship Fulfillment Automation Through Rule-Based Order Routing
Last updated on May 17th, 2022 at 04:51 pm
You can’t truly automate your dropship fulfillment workflows without intelligent rule-based order routing.
If you’re not routing orders through automation, you’re missing out on robust routing capabilities that can be incredibly beneficial to your dropship operation.
Whether you’re dealing with product overlap or seeking lower shipping costs, improving your customers’ experience, or expanding your product catalog, automated order routing can help.
Keep reading to learn more about rule-based order routing and the advantages of automating this aspect of your ecommerce business.
What Is Product Overlap?
As a retailer, the ability to source products from multiple sources can be a significant advantage. Before we get too deep into an explanation of order routing, you need to understand product overlap.
Having several suppliers with product overlap can substantially improve your order fulfillment rate. If Supplier A’s product is out of stock, Supplier B probably has it.
It’s risky to rely on a single supplier as your sole source of dropship fulfillment. If they suddenly raise their prices, decide not to work with you, or go out of business, you’ll be left up the creek without a paddle.
While no two suppliers carry all of the same products, both will likely stock the most popular items if they’re in the same industry or niche.
Product overlap is when the exact product SKU is available to source from multiple locations, whether your internal warehouse, a dropship supplier, or your brick-and-mortar store. Suddenly, you have multiple locations from which to source and have to decide when it makes sense to ship a product from one place or another.
What Is Dropship Order Routing?
Dropship order routing is the allocation and fulfillment of orders based on a predefined set of rules.
In short, it means receiving a customer’s order, locating the item in your—or a supplier’s—inventory, and delivering the product to the customer in the fastest way possible. Routing intelligence is used to determine the ideal stock location from which to source the product.
For example, you may always want to ship from your internal warehouse unless a product is out of stock. If you’re out of a product, you can set an order routing rule that automatically sends the order to your preferred dropship vendor. However, if the customer is within X miles of another vendor or the package weighs over X pounds, you might want to route the order to another dropship vendor instead.
An item might be found at your distribution center, on store shelves, direct from the manufacturer or dropship supplier, and so on. This is simple when you have one or two stores and a few stock locations and suppliers.
However, as you add stores, warehouses, and suppliers, the complexity grows exponentially. Once you’re sourcing from multiple locations, you’ll need much more than a spreadsheet or insubstantial order routing system.
Having one supplier or warehouse is straightforward. You can only route from one place—so it’s a no-brainer and doesn’t require order routing at this stage. One beach ball from one store. You or your supplier either has it in stock, or you don’t.
Then you add a supplier. So, if it’s not in stock at your warehouse, you can ship it to your customer from your supplier.
Now imagine your business starts to scale exponentially. You onboard five more suppliers, start selling on a new platform, and before you know it, you’re opening a few brick and mortar stores as well.
Your ecommerce site is driving even more sales, so life is good—plenty of orders for your beach balls and related products.
As your business grows and you can fulfill orders from more locations, you can fulfill beach ball orders from one of ten suppliers, from your warehouse, or off the shelf of one of your B&M stores. However, no location stocks ALL of your products, and you don’t want to deplete your product inventory from your stores.
This is when you start getting overwhelmed. Suddenly, you’re faced with a much more arduous problem. As your business grows, what used to be a simple fulfillment process explodes into mass complexity. Now you have thousands of beach balls and other products shipped from multiple fulfillment centers every day.
Depending on your order volume, souring from multiple locations can take multiple full-time employees to manage.
Rule-Based Dropship Fulfillment Routing Logic
As we’ve discussed, sourcing from multiple locations and suppliers presents several benefits, such as:
- Increases the probability that items will be in stock
- Not relying on a single supplier for your products
- Offers geographical diversity for faster shipping and delivery times
But when you have so many options for fulfilling an order, where do you start? There several options to choose from. You can use a combination of the order routing methods below or create your own workflows for more complicated order routing needs.
Route All Orders to One Dropship Vendor or Warehouse
If you prefer to work with one supplier out of all others (whether due to product selection, superior service, discounts, or something else), you can route all of your customer’s orders to that vendor by default.
Ideally, if you use this system, your preferred vendor stocks most of the products you sell. If not, you’ll frequently have to re-route the orders that the vendor can’t fill.
Route Orders According to Customer Location
If most of your suppliers stock most of your items, you can route customer orders to the vendor closest to your customer. Not only does this method expedite delivery, but you will save on shipping costs.
Route Orders According to Product Availability
If you have an expanded catalog spread across several vendors, you’ll likely need to route your customers’ orders based on which supplier has the product in stock.
This order routing option requires work if you’re performing it manually. However, you can effortlessly achieve this through integrating with your suppliers using a dropship automation platform.
Route Orders According to Item Price
This method can get tricky to manage unless one supplier’s pricing is significantly better than the others. It can be challenging to determine which vendor will be the cheapest and execute an accurate process to accomplish this. However, a dropship automation solution will consider potential dropship fees, shipping rates, and supplier pricing.
These aren’t the only methods available to you, and there’s no single way to automate order routing successfully. The process you choose depends on your suppliers, your business, and your needs.
Automate Dropship Fulfillment With Robust Order Routing Rules
Imagine trying to route dropship orders in real-time every single day. Can a manual process and spreadsheets handle it? No. Can your current software or sales platform’s order management system keep up? Maybe not.
Even if you’re getting by with an existing solution, might it be harming your business? Considering the complexity that multiple sources present, retailers need robust solutions to optimize their order routing capabilities.
The biggest question here is, is your current process costing you money? Are you losing out on more significant margins because you’re lacking the optimal solution?
You’d be amazed at what automating dropship fulfillment through rule-based order routing can do for your business. If you’re interested in learning more, talk with an expert about how Flxpoint can help.