Choosing the Best Dropship Software
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 dropship platforms, you’ll face a dizzying amount of software choices. The decision becomes even more complicated when trying to understand which software is right for managing your dropship operations—whether dropshipping is 100% or just a portion of your business.
Let us help you find a platform that checks all of your boxes. Keep reading for an in-depth guide to choosing the best 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 distributed order management software, you need first to understand what it’s not. 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.
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 dropship software will save you time, increase your profits, and transform the way you do business.
Why Use Dropship Software?
By implementing 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 solution to achieve success, they must support essential functions, such as:
- Price and stock automation: The 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).
Don’t waste your time with products that don’t support every order coming through your platform.
- 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
As multi-channel ecommerce became more popular, this system began to evolve. There was a need for multi-channel selling—a 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 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 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 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 software 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:
How to Evaluate Dropship Software Platforms
Now that we’ve discussed the need for dropship software, we’ll get into what you should look for in a dropship software platform—and the specific questions you need to ask. Let this serve as a guide when you book your next software demo.
Before you begin selecting a platform, you must define your business’s objectives and priorities.
Take the time to determine what you need the software to do for you. As you work through this process, involve every department in your business structure and discuss plans and expectations with your suppliers. An aligned focus will help when choosing the platform that best suits your needs.
By asking questions, you will develop a clearer understanding of your requirements over the features and functions that are only “nice to have.” Consider asking the following questions as you begin your search:
- In terms of your inventory, what are your success metrics? Do you wish to cut down on carrying costs, improve inventory turnover, or develop more accurate inventory counts?
- What are your plans for growth? Choose a tool that will help you stay on track with your goals and manage them more efficiently.
- Are your sales seasonal? If you have on and off-peak periods, this can have a dramatic effect on stock management. If your business heavily relies on seasonal sales, you need to make sure your dropship software can address this.
Once you’ve answered these questions, you can determine your specific needs and begin the search for the best dropship software.
Capable dropship software provides quick and efficient vendor onboarding workflows. You should be able to easily connect to any vendor or existing sales channels to pull or push product data, inventory, orders, and tracking.
When evaluating software based on vendor onboarding capabilities, ask the following:
- What vendor onboarding solutions does the software offer?
- Does the platform include a CSV parser to sync products easily?
- Can I bring in as many vendors as I want? Are there additional fees for adding vendors?
- Can vendors log-in to the software to receive order information, print shipping labels, etc.?
- Is the software EDI/API capable? What are the fees? Is there a fixed rate?
- If I plan to add several additional vendors, am I alone in handling any difficulties, or do you provide account manager assistance?
Available Source Integrations
As a dropship retailer, integrating your supplier’s inventory feed and order fulfillment process is a vital component of dropshipping.
As you’re speaking about a product’s available source integrations, ask:
- Can I send orders to multiple channels (to an internal warehouse, 3PL warehouse, brick and mortar POS, and dropship suppliers)?
- Can I integrate my vendors AND my warehouses?
- Does your platform have pre-built connections, or do I have to pay for each integration?
- Do you have a list of suppliers that you already integrate with?
- Can my vendor or I work with a developer and integrate via API?
Available Channel Integrations
On the other side of the process, you also have to consider the platform’s available channel integrations.
Which channel integrations do they support? Dig into this by asking the following:
- Which specific online store platforms do you support?
- Are there existing, pre-built connectors?
- Do you support custom EDI/API integrations?
When fulfilling individual orders from shared, pooled inventory, the product can be bought out from under you—so syncing is essential when evaluating dropship software.
You must be able to trust your inventory feed.
When discussing inventory syncing, ask the following:
- How often am I able to sync? Every five minutes or every hour?
- Do you offer any customization on how often or precisely what time I sync?
- Is everything updated during each sync, or is the software smart sync enabled?
- Can I build sophisticated rules to only list the proper quantity for each channel?
Product Data and Listing Management
If you have a lot of SKUs to maintain and it’s impossible to update your product data one-by-one, product data and listing management capabilities should be very important to you.
Connecting inventory and product data from multiple sources can lead to messy product listings if you’re not careful. You need tools to merge, prioritize, augment, and filter data.
It’s essential to choose wisely here because there isn’t a lot of dropship software that does this very well. As you’re evaluating a dropship software solution, consider the following questions:
- Can I pull in the product data from the data feed?
- Can I pull in custom attributes and custom meta fields?
- What can I do with the meta fields that are brought in? Can I push that all the way to my channel?
- Can I use meta field data to filter products in and out of the platform?
- Do you offer intelligent parent/child mapping? Can I propagate that from the supplier feed all the way to my channel?
- Can I create new product listings that require custom attributes?
- Does your software support kitting and bundling orders across multiple sources?
- Is there a built-in product repricer? If not, can I integrate with one?
Order Orchestration and Routing
It’s important to understand what kind of intelligence is available within the platform you’re demoing. This is where you can save money. The right software will help optimize where, when, and how you send your orders.
Envision the business scenarios you encounter daily. If you keep these workflows siloed, you’re doing a lot of manual work—wasting time and resources.
As you work through a product demo, be sure to ask the following:
- Can I build routing rules to optimize fulfillment by location, cost, warehouse preference, etc.? Can I customize all scenarios?
- Is there data available for automation rules?
- Are there cross-docking and freight-forwarding capabilities?
- Can I quickly access reports to reconcile orders with multiple purchase orders? How can I make sure my sources, products, and channels are profitable?
- Can this platform handle wholesale orders in tandem with dropship orders?
- Can I wait and send orders in bulk? Is this the case for both wholesale and dropship, or JUST for one or the other?
Invoice and Accounting Management
As you talk through your dropship software needs, clarify how you use your accounting software and where you envision data integration happening.
This piece becomes more important as your business scales up with the platform. To get a better idea of the software’s accounting management capabilities, ask:
- Can I pull in supplier invoice data? How does this work?
- Does your platform support PDF conversion capabilities?
- What accounting platforms can I integrate with?
- Is channel tax pulled in automatically, or do I have to enter that myself? What about marketplace fees?
Returns and Refund Management
Not all aspects of return and refund management can be automated, but it’s nice to find out how a prospective software handles these pieces.
Ask questions to understand what’s pulled from the channel and if there’s an opportunity for automation.
On the source side, ask the following questions about returns:
- How do vendor returns within the platform work? How are shipping labels created?
- What kind of rules can I write?
- How much of the refund is handled by your software?
- How does it reconcile to my accounting system?
Unique Model Needs
If you’re on the supplier side of dropshipping and own your own inventory, you may have unique needs for a potential dropship software to fulfill.
If you have a B2B membership business model, you should also ask:
- Can I receive orders automatically?
- Does your platform auto-generate invoices with specific fees?
- What payment methods are accepted?
- Can I bring on new resellers? What does the sign-up workflow look like?
If you’re managing a network of marketplace vendors, you may be concerned about:
- Who sets the channel pricing, how is that automatically generated?
- What is the invoice and payment workflow?
- How do I handle vendor shipping and return labels?
- Can you meet unique packing slip needs?
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