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Your dropship business model is only as reliable as your distributed order management tool. If your dropship software can’t handle multiple warehouses, suppliers and dropshipping providers, you’ll have trouble exporting sales orders efficiently.
If you’re looking to set up or switch to the best dropship platforms, you’ll face a dizzying amount of software choices. The decision becomes even more complicated when trying to understand which best dropshipping apps is right for managing your dropship business operations—whether dropshipping is 100% or just a portion of your business.
Let us help you find a best dropshipping platform that checks all of your boxes. Keep reading for an in-depth guide to choosing the right dropship software.
Defining Dropship Software
The internet has provided a plethora of new ways for people to start online businesses and fulfill the demand for ecommerce products. Distributed order management is a hands-off form of order fulfillment used by Big Box stores as well as smaller e-tailers.
To understand the best multi-channel inventory management software, you need first to understand what it’s not. Dropshipping automationinsights show that dropship software differs from aggregator apps and arbitrage tools.
Dropship Aggregator Apps
A dropship aggregator is a wholesaler that buys products from multiple manufacturers to provide resellers a variety of products to sell. They’re basically the middlemen between the product suppliers and resellers. Often, they’ll offer their products through an app, which is considered one of the popular dropshipping apps.
Retail Arbitrage Tools
Retail arbitrage tools scrape websites with publicly available products and place them on your online store or marketplace.
Dropship aggregator apps and retail arbitrage tools are not distributed order management solutions. We won’t be getting into those.
The dropshipping process involves a seller that partners with a supplier or manufacturer and agrees to list the supplier’s catalog on their website. When a sale is initiated, the seller forwards the information to the supplier, who then fulfills the order. The seller pays the wholesale costs for the goods and keeps the profits.
For a fulfillment method with thin margins, business owners need to know that the software they invest in is worth the money and will have an outstanding ROI. The right ecommerce dropship software will save you time, increase your profits, and transform the way you do business.
Why Use Dropship Software?
By implementing best dropship software infused with automation technology, you’ll free yourself from performing repetitive, routine tasks. You will save time and improve efficiency.
For a dropshipping business solution to achieve success, they must support essential functions, such as:
- Price and stock automation: The ecommerce dropship software must optimize the prices of products and calculate the share automatically. It eliminates manual work.
- Inventory management: As a reseller, you’re responsible for maintaining inventory levels to withstand stock-outs, even though you don’t store your products.
- Monitoring competitors: You must have the ability to keep an eye on your competitors’ store products and prices.
- Integration with multiple platforms: By integrating with various platforms and marketplaces, you’ll satisfy customers more efficiently and dramatically increase revenues.
But it doesn’t stop there. An effective distributed order management solution should not only enable you to dropship orders but orchestrate orders to your internal warehouses, external warehouses, and a broader ecosystem (such as a brick and mortar store). Managing dropshipping inventory also plays a key role in keeping products available and avoiding stock-outs.
Don’t waste your time with products that don’t support every order coming through your platform.
Ecommerce Glossary
- API: Application Programming Interface
- EDI: Electronic Data Interchange
- ERP: Enterprise Resource Planning System
- DOM: Distributed Order Management
- OMS: Order Management System
- POS: Point of Sale System
- WMS: Warehouse Management System
To understand the dropship software ecosystem, you have to make sense of the ecommerce software ecosystem first.
Traditional retail involves having a single warehouse and a brick and mortar or an online store that you sell through. Usually, the warehouse is managed with an ERP system, and there are very few moving parts. Smaller companies may only have a single WMS or OMS.
In this situation, your in-house development team would handle custom integrations that manage everything from inventory and orders to shipping and tracking synchronization.
When adding product data and pricing to your store, you would perform that manually with a spreadsheet.
Evolution of Ecommerce Software Ecosystem
Multi-Channel Retail
As multi-channel ecommerce became more popular, this system began to evolve. There was a need for multi-channel selling—a dropshipping retailer lists products on multiple online marketplaces in addition to their online stores, such as on Amazon, eBay, and AliExpress.
Traditionally, ERPs would handle all operations together. Suddenly, we saw them break out into individual, more focused software options.
The rise of open API and in-house proprietary systems also contributed to the shift in the ecosystem. There was a need for a specialized approach.
WMS evolved to handle more involved tasks such as barcode scanning, warehouse optimization, and pick and pack management. Shipping managers emerged and handled carrier rate shipping, automatic label printing, and negotiating shipping rates.
Entire SaaS economics developed around these two offerings.
And now, you can also add an accounting system into the mix to generate invoices, reconcile your inventory, and handle your taxes.
In the last decade, there has also been a rise of multi-channel order and listing management software. This software focused on multi-channel inventory management to ensure that when something sells, the inventory is pulled appropriately across multiple channels.
This multi channel inventory management software further specialized the channel listing creation process and added product repricing capabilities.
All of these upgrades are great, but with so many software options, how do you choose?
Distributed Order Management
Consider distributed order management (DOM) solutions.
DOM refers to all supply chain integrations. It’s a method used to optimize fulfillment so that customers receive orders on time and in the most cost-efficient way.
Dropship software is a subset of distributed order management. With dropship software, you can route orders to multiple locations. They can go to your own internal WMS, but in some cases, you may want them to go directly to your ship manager or even your accounting system.
Inventory needs to be synced from many different places. With dropship software, you can integrate with 3PL warehouses and APIs directly. It can also enable you to route orders directly to your brick and mortar POS in situations where an in-store pickup option is offered.
This is order orchestration. Dropship software improves your overall supply chain by automating several processes, including order routing, splitting, shipping, forecasting and reordering, and inventory management.
Modern dropship retailers need a platform that supports these workflows, which are vastly different from the traditional supply chain.
Traditional Supply Chain vs. Distributed Fulfillment
In the traditional supply chain model, bulk freight purchases are sent monthly or quarterly to a retailer’s location. Orders are often placed via email or over the phone, or dropship retailers check out manually online through a B2B ecommerce platform.
Vendors are set up through EDI implementations that can take 3-4 months.
The same software used to support these processes just won’t cut it for distributed fulfillment workflows. Traditional retail software isn’t built for the complex challenges modern ecommerce retailers face such as:
- High-volume, daily orders: Syncing on-hand orders and the pooled inventory concept presents new challenges. You’re sharing a product with another reseller that can buy the product out from under you before you place an order.
- A multi-warehouse structure: It’s challenging to keep track of what inventory you have where if you have more than two warehouses. If you add 3PL warehouses to the mix, it’s even more complicated because you’re slightly removed from managing the inventory. Dropship software can consolidate this data and give you a bird’s eye view of your inventory in addition to 3PL inventory access.
- More product suppliers: The more product suppliers you work with, the harder it becomes to manage relationships, track product data, and calculate how much to order. DOM systems can help handle this information and track how and when to order from your vendors.
- Orders placed across multiple disparate platforms: If you’re syncing and reporting across platforms, you’re not responsible for syncing order numbers on your sales channel to purchase orders that could be split up between multiple suppliers. It’s tough to reconcile and report on those accurately.
- A growing SKU portfolio: When your SKU count starts to hit the hundreds or thousands, managing them on your own is no longer feasible. DOM helps you keep a better eye on your products and which channels you are making them available in.
- Existing software solutions that are not centrally connected: Multi-channel retail demands seamless connectivity. If your dropshipping software for suppliers isn’t synced up as well, you’re putting the retail experience at risk. DOM seamlessly brings all of your processes together.
The difference in processes:
