Watch: Webinar – Demystifying the Dropship Software Ecosystem
Retailers and Suppliers face a dizzying amount of software choices when it comes to managing their ecommerce business. It becomes even more complex when trying to understand which platform is right to manage your dropship operations, whether that is 100% or just a portion of your business.
Travis Mariea, CEO of Flxpoint, hopes to help you understand the different software options you have in the dropship ecosystem and decide which one is right for you.
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Below, you will find a transcript of the webinar.
All right, we’re going to go ahead and get started. Thanks again, everyone for joining our Demystifying the Dropship Software Ecosystem webinar today. Really looking forward to making some more sense of this really large, really fragmented ecosystem of dropship software, E-commerce software and hopefully you guys can learn a little bit today. It can help you in your next demo, your next software choice.
Feel free to please go ahead And put into Q&A any questions you have. Let us know as we start going through this as well anything we might have missed, things that we didn’t bring up you think might be useful, helpful, would be great. We’ll go ahead and answer everything at the end. So the quick agenda today, I want to start off by defining dropship software. We’re taking a little bit of a broader approach at what we call dropship software and I’ll get into that.
We’re also going to look at the evolution of E-commerce software and the ecosystem behind it, really kind of talk about what’s the need for having a dedicated piece of software that focuses on drop shipping or focuses on distributed order management, and what that looks like.
We’re also going to talk about the traditional retail dropship workflows. Really the old traditional supply chain versus the new dropship workflows and how those differ in the needs of your software platform. Also, really a good portion of this is about how to evaluate the actual software plan forums out there, what to look for, what are the specific areas you should be focusing on, what kind of needs you have, and how they relate to the actual platform features and functionality, and like I said, we’re going to be doing Q&A at the end.
So to start with dropship software and defining it, I want to start with a diagram. There’s a lot of diagrams in my presentations in general, because they really show what drop shipping and as you see there in quotes, distributed order management is. So like I said, we’re going to take a broader view of drop shipping as a piece of distributed order management, and focus on the software that can do really everything you’d ask for out of a dropship piece of software and more.
Distributed order management is really not only just be able to drop ship orders and sync with your dropship vendors, but also be able to orchestrate those orders to your internal warehouse, to a third party warehouse, and maybe even your brick and mortar store, from a ship from store, or a pickup and store kind of effort. So I want to look at it as a larger ecosystem rather than just focus on specific drop shipping software.
Because really, if you’re taking advantage of the drop shipping model, you should have a distributed order management software in place that can not only do drop shipping, but can also orchestrate all of the orders that are coming through your platform. If you find any kind of success in drop shipping, you’re going to end up moving to one of these systems anyways, so I did want to look at it as a subset of the overall ecosystem out there.
So you can see the different data flows that we’ve got here. We’re going to talk more about those but obviously, you’ve got inventory and product data feeds coming from this, what we call on the left hand side, your sources, which could be your suppliers, your internal warehouse, invoices, things like that are coming from the left heading to the right, which are going to be your sales channels, online platforms, marketplaces, in some cases, point of sale, as well as your B2B larger retail partners or any kind of EDA API integration on that side, on your sales channel side.
In the middle there, obviously, like I mentioned, order orchestration, inventory visibility and management, vendor onboarding, reporting, really with the concept of multi source, multi channel and being able to really manage that effectively. Then pulling back order information pulling back things like taxes and fees from your channels, refund and return initiations, cancel initiations.
All that data flow going back and forth is really important and a big part of the dropship and distributed order management software ecosystem. What we’re not talking about today, so I do want to kind of clarify because dropship, this word gets thrown out a ton. I really do want to clarify what we’re looking at today, it was mostly that flow we’re looking at, in those past slides.
It’s not necessarily what you might, if you were to look up drop shipping companies, and even if you might search drop shipping software, you’ll find some of these logos and these names, but we’re not going to be talking about dropship aggregators, and really, we define those as a company that basically takes a reseller account with dropship suppliers and adds a layer, a middleman layer between the supplier who actually holds the products to the end, let’s say reseller, in this case, who wants to sell them.
They’ll usually put together an app to make things easier. You might find them in the Shopify App Store, things like that. We’re not going to really talk about those single point apps at all. We’re also not going to really get into retail arbitrage tools, or apps. Oberlo is probably the most popular one of these.
I don’t really have it in that top dropship aggregators section because it truly is retail arbitrage in the sense that they’re scraping a website with publicly available products, and just simply placing them on another channel like your Shopify store, wherever it might be, a post to an aggregator who’s actually pulling from a warehouse in a B2B fashion, which requires a reseller account. So those top two are really similar but are different in their own way.
Then obviously, it’s worth mentioning dropship supplier directories. You search the word dropship or drop shipping companies you’re going to see SaleHoo and Worldwide Brands show up a lot. Really with that, sometimes it’s tough if you’re just getting started to really identify this software, what is this really. These are purely just directories that help you find new suppliers.
I think SaleHoo has a little bit of a software piece in there, an online store piece but not enough to really dig into. I also want to clarify there’s two different types of dropship software we like to think about, at least from a feature and functionality standpoint. For the purpose of this actual webinar and in a lot of our conversations here at Flxpoint, we like to talk about retailer dropship software or supplier dropship software and what that really means is, a retailer who’s usually purchasing from a supplier who might be a brand or a wholesaler.
Their dropship software is mostly focused on the supply chain integration and management side of things. Multi source inventory visibility is a big piece, that order optimization in the vendor onboarding, like I mentioned is a huge piece of it. That’s really the software ecosystem we’re going to be focusing mostly on today and how to evaluate a dropship platform that kind of helps in that area. We’re not really going to be talking too much about the supplier dropship software here in the bottom, which is really more about that warehouse, that distributor, that brand, whatever it might be, who’s selling to another retailer, their reseller that needs help managing that.
They might need to generate a dropship feed for their resellers, they might need to just overall manage the retailers that come on board and that network and the orders that are coming in from them. Then for the big box retailers, just being compliant with our EDI standards. There’s definitely software out there and there’s some overlap and companies that do a little bit of both, so you might see some names, but we’re not really going to focus on that as far as evaluating and looking for new software.
So with that in mind, I do want to ask our first poll. We’ve got two polls. I want to launch this really quick, and just get an idea, since we’re not going to talk too much about the supplier side, if there would be maybe some desire to have a future webinar about that. So let me pull over this poll real quick.
All right, and you should have a poll in front of you. Basically, we’re just understanding for those that are on today, do you have a need for both of these types of software? Are you mostly focused on the retailer side? Are you mostly just focused on having the retail software or do you see the need for the dropship supplier software as well? So just want to get a better feel for who we’re speaking with a day, and then maybe we might have another additional webinar in the future about the supplier software side. So I’m just going to give that a couple more seconds.
We’ve had about seven 70% of people vote so far. All right. I have a couple more coming in now. Okay, great. So yeah, it looks like we, which is great, we’ve got a good amount of people who are looking for both. So, I don’t go into too much on this webinar today about which software does specific feature and functionality from the names that we’re talking about. I want to stay away from that, but it’s good to know that this is something to consider when you are looking at software, can it do both?
Does it really optimize that supply chain side of things, and then you also need, if you act as a supplier, in our terminology, and you need to sell to retailers, people reselling the goods that you store, does that dropship software serve that need as well? So that’s good to know and it’s interesting to see that that was the highest and retailer right behind it, which is good, because that’s what we’re focused on today. All right.
So, to make sense of the dropship software ecosystem, you have to start with the E-commerce software ecosystem, and really understand the evolution of that and where it came from where it started. So, in the beginning of retail, it’s traditionally a single warehouse that you had and you had a brick and mortar or you have an online store, let’s say, that you sell through but you’ve got this one warehouse and that’s basically managed through an ERP system.
Smaller companies, maybe just a purely warehouse managed system at WMS, or often referred to just as a pure WMS. Got some definitions down there for all the acronyms that you guys are going to run into if you haven’t already, and all that. So ERP is basically, it’s exactly what it sounds like. It’s more enterprise focused. It’s all about bringing everything together from accounting, from HR in a lot of cases.
Obviously, there’s a warehouse management module, a ton of different stuff that could be involved in the ERP. The warehouse management, often a smaller piece of it that’s mostly focused just on the warehouse and LMS, a lot of times that’s synonymous and there might be some more features towards the order orchestration side of things or just order management in general, I should say. So it’s pretty simple, right?
It’s a very plain boring diagram here in slide. It’s just a warehouse on top of an ERP, let’s say, and then everything from getting it synced with your online store, your POS system, your trading partners, that was just built custom by your in house dev team. Then as far as setting up products, product creation, creating a new product listing on your store, or wherever it might be, you went did that manually via spreadsheet, and then you just priced it manually as well. That was a traditional way of running software for a traditional retailer. Very simple. Not a lot of moving pieces.
As we saw, a couple things, really. The evolution of the retail system was driven a lot by the need and the requirement to sell across all these multiple sales channels that are popping up in marketplaces. The rise of the API as well, open API standard and the rise of platforms out there, rather than in house proprietary systems, really, you start seeing specialization. You saw a warehouse management system break out and be its own thing.
Just focus really on barcode scanning and getting good at that and the warehouse optimization of the pick pack management and where it was located, what it was, really kind of doubling down on that functionality and as a standalone product, and that’s all it did. Well, the next slide will show all the vendors here, as we see across each one of these. Then there’s shipping manager, which a lot of times that couldn’t be integrated to a warehouse management system, but really, we saw where these pure shipping managers are, we’ll call them.
Shipping aggregators is another good way of putting it, where you need to ship an item. How do you best do that? How do you do it the cheapest? How do you do it the fastest? So carrier rate shopping, looking at UPS, USPS, FedEx, and making a determination on which one you should use, then automatically printing that label. Then also from there negotiating and having built in discount shipping rates for you. So, not even part of the warehouse managed system and all the functionality there, there’s no barcode scan, there’s nothing there.
It’s just for shipping out items. So we saw that. Those can start as low as $29 a month, maybe even lower in some cases. So we saw those two kinds of breakout. This whole SaaS economies, Software as a Service economies around each one of those. Then in this rise of the open API and all these platforms, you can kind of see here in the middle, everything’s basically connected. You can have a warehouse manager system, you can have a shipping manager, they can talk to each other, and it’s not a ton of duplicate effort and replicating orders.
Then with that, you can easily connect to your accounting system. So if you’ve got other B2B workflows where you need to generate POS or invoices or accept them, and keep everything on track so that you can reconcile everything and report on it, make sure you’re good for tax season, that’s going to be its own software. Traditionally, all this was bundled up into an ERP. Now, they’re all separate pieces of software that are all connected via some kind of pre-built connector or your own team’s custom integration.
Then the big part that we saw, really, in the last five to 10, really, last 10 years has been this rise of this multi channel order and listing management software. So everyone hears the term omni channel and wants to be able to sell everywhere. I mean, you provide the same experience, whether it’s pricing, whether it’s product data, whatever it might be, you need something to manage it.
I call it a multi channel because it’s really up to you. I mean, omni channel is what I consider making the whole thing make sense from supply chain to the actual channel listing side of things, where this is really focused on, you’ve got multiple channels connected, you need to make sure when something sells that the inventory is pulled appropriately across those multiple channels.
The other side of it, too, was just creating listings. Creating a new product on eBay or on Amazon or any of those marketplaces can be fairly difficult, because they have requirements depending on what category the product falls. So there’s some specialization that was done there, and then a big part of that is repricing. If you’ve been around the E-commerce game for a while, you know that repricing is a huge piece of selling on Amazon.
So your ERP really wasn’t set up to do that. So these special platforms around selling on marketplaces in different channels really started showing up. The difficult part with this all is that there’s a ton of different options out there. There’s a ton of software and it’s really tough to make a decision on what’s right for you, how you should use something, why you should use something, and really that WMS category and that multi channel order and listing management category, I’ve got them bleeding in together and really I love if you’re experienced and you use some of these or just been in E-commerce for a while, I’d love for you to put in the Q&A if you don’t agree with any of this, if you think we miss something, because really, this was kind of tough.
I’ve kind of skewed the WMS like Fishbowl is definitely on a multi channel management, right, but it starts getting a little bit blurry as you get to the Skubanas of the world and the Stitch Labs and the TradeGeckos where you can really make an argument that they’re multi channel, but some people use them for a WMS. It’s interesting to see.
There’s a lot of overlap and There’s a lot of feature additions that are happening on both sides that that line is blurring very much between what’s used to be used for your warehouse management versus what’s for your multi channel management. It’s almost like we’re going back more towards the ERP world where these platforms are starting to do more and more. So with that shipping manager, everyone, I think is probably familiar with ShipStation, if you’ve been around for a while.
The other ones out there, ShipWorks, ShippingEasy. Shippo is one where it’s more of an API, but there is an interface that’s part of it as well. Then accounting systems, I did loop in the TaxJars and Avalara, just kind of put those in there as well, because those are relevant in E-commerce. I think the majority of the guys out there are using QuickBooks or FreshBooks, one of those, but really, these are the main, if you’re not dropship, if you’re just traditional retailer today, you don’t have to have a distributor or manager model whatsoever, which I’ll talk more about what that looks like on the next slide.
This is basically what you’re using. You’re using at least one of these in really a lot of these different areas. So, like I said, please chat with me if you think there’s anything in here that would be helpful. I’ve had a couple people raise their hand. I’m just going to test real quick, make sure that we can actually put stuff in the Q&A if we want to test that.
All right, so go on to the next slide. So distributed order management/ and a subset of that is essentially dropship software. This basically means, I talk about distributed management, it’s all supply chain integrations. So distributed meaning that orders can go to multiple different locations. They can go to your own internal system, your warehouse management system. In some cases, you might want them to go to your shipping manager, like a ShipStation directly for some reason. Sometimes you might need them to go to your accounting system.
There’s people that manage inventory and orders on QuickBooks. So there’s all these different places that orders can go or inventory needs to be synced from, but then really the true value when someone adds one of these in is now to be able to connect through third party logistics warehouses, API’s directly to integrate with their vendor, their dropship supplier, custom integrations very easily and cost effectively.
In some cases, if they have a pickup in store, some of the larger enterprises retailers have a pickup and store function on their website. You need to build a route in order directly to your brick and mortar and a lot of times directly into a POS system because that’s where you’re managing all of your in store inventory and orders. So, that is what we call order orchestration, that is optimizing and routing and making sure that when an order comes in it goes to the correct source, and it also is done in the most effective way.
With that, you also have to think about how do you onboard new vendors, what’s the integration look like and just how does the overall inventory order manager look like. So that’s what we’re going to dive in today and the systems that are out there that help you do that.
So a couple we mentioned here. Obviously we’ve got our companies here, Inventory Source and Flxpoint. Depending on who you are as a company, what size you are, what your needs are, one could be right for you, the other one as well. Spark Shipping, Duoplane have been around there for a while. Logicbroker, Dsco, SPS is on here. They are really more on the supplier side from, I’d say that’s what you’re going to hear mostly, as far as a lot of the smaller vendors who need to sell on the large marketplaces and work with large retailers.
You’re going to hear that more often, but they definitely span across both dropship worlds and [CommerceHub 00:20:19] a large one as well. Some of the top retail names use them. They’re definitely one of the enterprise leaders in that side of things. So, you know what I’m not going to do today is really go into a feature by feature comparison. It’s moving too quickly and I don’t really want to speak to some of our competitors’ features and functionality.
I think the best thing for everyone really to do is to get demos with these vendors. I want to prepare you today. The purpose today is to prepare you so that when you do have vendors, prepare with the questions you didn’t think about asking and give you a checklist to really go to these demos and know which one’s going to be right for you.
So I want to talk a little bit about the importance of, you might have noticed, if we go back a couple slides real quick. Let me just show some of these names up here. The Skubanas, the Ordoros, [inaudible 00:21:12] there’s different one, SellerClouds, there’s multi channel management and WS software that might claim dropship, might claim that they can easily solve this and they know it’s a highly searched term, and maybe they do solve it for 80% of their customers or less, but in general, there’s a fundamental difference in dropship and distributed order management that makes it very tough for software that was built for traditional retail to solve these problems and that’s what I want to talk about.
So that’s why you see these names here, because really, they specialize in these workflows. The workflow change really is going from this left hand side with the traditional supply chain. What we all know as just buying a bulk freight purchase of something on the pallet in a case and it shows up your brick and mortar location, you as a retailer selling out the front door to people walking by.
That’s what a lot of software was built for, and then add on an online store and build an easy integration, and there you go. You’ve got inventory and order management and then now you can send an email maybe if you have to drop ship something. That’s what a lot of this software out today that was built for traditionals is claiming as dropship is an email that they can send, when vendors identify that you dropship from.
What you really need for distributed fulfillment, you can see on the far right hand side drop shipping specifically is when you’re buying that after the fact from your brand and your wholesaler and they’re shipping on your behalf. Then the other two pieces here are having your own inventory stored in third party warehouses in brick and mortar locations. What you really need is something that supports these workflows, these three different workflows, which are vastly different from what a traditional supply chain is.
I’ll talk about those here after our second and final poll. We’d love to know how you guys are currently shipping your orders. So we have those four different options up there. Let me launch the poll real quick. So we have these four different approaches. Select all that apply for you. The traditional, shipping from your own warehouse kind of approach, where you’ve got things stuck in your own warehouse, and you’re shipping them out there, whether it’s directly to your brick and mortar in a freight way or if you’re shipping directly online, from your warehouse.
Are you shipping out of your brick and mortar? Do you have stuff in the back where an online order comes in and your retail clerks actually are managing both retail in store customers as well as online. Third party logistics is a huge, huge market that is getting larger and larger every day. Shopify really just rolled out there Shopify fulfillment, which is essentially third party logistics.
So I expect to see some there but it’s definitely newer and definitely takes a little bit more order volume to make sense for a lot of companies. Then drop shipping, if you guys are interested in drop ship software, I’d say you probably are drop shipping or looking to do more of it or started at least. So, we are seeing a good portion. Looks like 75% so far have identified that they are drop shipping, but a good mix here. I’m going to give a couple more seconds. Looks like there’s just over 60% have people voted. So I’m going to give a couple more seconds here.
I’ll go ahead and end it. So as you can see, a lot of drop shipping here. That’s how most people will probably be interested in us, because it’s a dropship webinar, but it looks like there’s a good mix as well across the board from your location. So interesting to see. With that in mind, that’s why distributed order fulfillment and distributed order management systems are so important. You’re doing a lot of different things from a supply chain perspective. You need to be prepared when an order comes in to do any one of these four.
So these new workflows that I talked about, they’re very different from what traditional retail software was built for and really, they’re still not even the norm. Distributed fulfillment is not the norm. The norm is this traditional approach. If you go to any trade show, you’re going to see that you talk to people about drop shipping and how they’re set up. A lot of the retail world is still set up in a traditional way. So a lot of software serves that market.
That quarterly buying of bulk freight, you go to a trade show once a quarter or twice a year, maybe just once a year and you’re buying really one to four times a year. That’s still very common for some of these retailers. So they don’t really need a lot from that perspective. Orders, because it’s only happening one to, let’s say six to eight times a year, you can place emails, I’m sorry, you can place orders over email or phone, it’s no big deal.
You can even go in. A more sophisticated supplier might have a B2B, E-commerce Checkout, which is great. You can go in and buy stuff ad hoc, but you still have to manually do it every time and check out your consumer with a credit card and things like that, or maybe you’re on terms, but either way, you still have to go through that process, and then these EDI implementations, it’s surprising to me. I get it, we do them here and they feel a bit old school and they feel a bit overly complex for what you’re doing.
They really shouldn’t take three to four months, but that’s kind of the world that we live in and that’s the vendors have been set up. That’s an acceptable time period. So we’ve seen that as well. So with that, they’re not built for these new distributor fulfillment workflows. The high volume daily orders, that’s not something that traditional retail is ready for.
Syncing on hand orders as well as the pooled inventory concept where if you are actually sharing that product with another reseller that could buy that out from under you before you actually place an order, very new problem, very new challenge that these new distributor workflow and dropship retailers are having to face. Orders placed across multiple disparate platforms.
So syncing, reporting across those platforms, not only that, you’re now trying to sync an order number that you have on your sales channel, order number 101, whatever might be to a purchase order that could have been split up to multiple purchase orders because you had multiple suppliers fulfilling this one order across multiple items and you now have to reconcile and sync those back and then report on those properly. Very new reporting challenge.
Smaller more frequent invoices. So the one to one PO to invoice concept gets very tough when you’re sending a ton of, what we classify as POS. When you’re sending an order to a dropship supplier, that makes it very difficult to reconcile. A lot of times, you’re not getting orders back on an item, I’m sorry, invoices back on an order for a couple weeks, and it’s tough to even understand if that order was profitable. You need to have a new system to really pull in those invoices quicker and understand if items are profitable and report on those in a more timely fashion.
The shift in inventory ownership in general, you’re used to having these products in your brick and mortar or in a warehouse that your team is at, used to taking a picture of them, feeling them, touching them, understanding what kind of product they are, the quality of them, writing a description based on what you see, that’s no longer happening if you’re drop shipping an item, especially doing it in a large catalog for a good portion of your catalog that you’re not actually bringing in.
So the need to sync inventory images and descriptions at least as a starting place and then add to those is a new need in the market. Then when refunds and returns happen, how does that work? How do you manage that with your vendors that some might accept returns but some don’t and you need to really accept all returns, it’s a very new challenging and complex issue.
Then on top of that, you’re now dealing with a ton more trading partners, essentially. Whether it’s from you have now a lot more retailers who can just get started very quickly online and sell and someone might be able to gain an audience and they’re worth working with. They might not have a brick and mortar, but they’ve got a YouTube following or Instagram or whatever. So there’s a ton of that popping up.
On the other side of the supply side, you’ve got a ton of brands showing up there, it’s easier to create a brand and a product and go to market with that. Now that you’ve got dropship as something that you’ve got in your arsenal, you can now work with a lot more brands more efficiently. So you choose to do so but with that you’ve got higher volume partner onboarding, so you have to onboard them quicker.
Now you’ve got accounts receivable risks, because they might not be as established. You might not have met them at a trade show, they haven’t been verified and vetted by other retailers you know. So all new challenges that you should be thinking about when it comes to dropship if you’re not already doing it or are thinking about these.
So with that in mind, there’s obviously a checklist because it’s a different buying experience. You’re not just buying what is like an inventory order glorified spreadsheet in some cases. There needs to be very sophisticated workflows that are accounted for here and really, from an integration standpoint, a lot of different moving parts. So we got a checklist here for you, and we’re going to go through each one of these in a little more detail in next couple slides, and this is really should serve as your guide to when you jump on a demo and you book a demo with a account executive or whoever might be from a dropship software company, you should be thinking about these things, and be asking these questions and this is really going to help you, outside of the price and the cost of the software and how much you like the sales rep, this is really what should help you drive your decision and when you’re looking to buy a new platform for distributed order management.
So vendor onboarding, like I mentioned, there’s a ton of more vendors that you’re going to want to onboard are being forced onboard, just because Amazon is forcing you to have a larger catalog, whatever it might be. Vendor onboarding needs to be quick and efficient when you bring on new vendors for dropship perspective really. So how do you do that typically? You have to integrate an inventory feed, you have to get their data somehow.
A lot of times, they’re going to say we do EDI, we’ve got an API, here’s a CSV file, they’re going to tell you a ton of different things. It’s going to vary in data quality, it’s going to vary in the amount of times they update it, all of that. So knowing that you’re going to have to constantly do this and add new vendors, what’s the software offer? Does it offer a self service tool or do you have to pay every time to have their team onboard a new vendor?
If it’s a self service tool, obviously dig into that demo. Understand what I can do. The majority of your vendors are probably going to have, if they’re dropship capable, a CSV file they’ll give you. So is there a CSV parser and a mapping tool to bring in that data to easily sync inventory, and then can I also sync in the product data side of things?
Can you bring in as many vendors as you want? Can you bring in additional, those are additional fees for each one. How does that break out and structure work? Understanding that is a key piece to it. If they don’t have any capabilities, and you’re a retailer that you feel that, because you’re positioned in the market, you can have your vendors actually log into your software and receive orders and update tracking and even maybe update their inventory in your software, it doesn’t always work for all retailers, but if you’ve got some leverage, we definitely see it.
So is there a portal. Can a vendor login and actually receive shipping labels and the order information and things like that in the vendor portal? You should be asking questions like that if your vendors would actually, in fact, log in. If you’re brand new at drop shipping, your brand new at online retail, you don’t have a ton of orders coming through per month, it might be tough to get a vendor to login, but we see for the larger ones, this is a very key part of their strategy.
EDI and API capable, and then what are the fees there. EDI, like I said, can be a little bit of a hassle, but it is a widely accepted part of retail. Some of the vendors out there charge a large amount for EDI versus other kinds of integration. So definitely get those quotes. Get an hourly number, see if you can get a fixed rate, things like that, especially if you know you’ve got some EDI integrations in the pipeline.
Then when does it come to integrating these new vendors? If you plan on adding 50 vendors this year, which we see that could be a common number. There’s a lot of retailers we work with that have their six or seven vendors they work with but then I would say a large majority have north of 20 to 30 vendors and are looking to add more.
What does this software platform offer from an account manager assistance? Are you on this all alone to go and add these vendors? Do you have any help from an expert there? That’s something I think people miss, and understanding what’s the capability of the software company to actually have a human and a people side to actually help you execute on your business goals.
As you bring on these new vendors, you need to be thinking about, okay, how do I integrate? CSV, check, we’ve got a mapping tool, that’s great. I want to see the value in distributed order management, I want to send orders to not just my dropship supplier, but I also want to send orders to my warehouse and my brick and mortar and things like that. Really, you don’t have to do that.
When you buy dropship software, you can segment it off to just send directly to your dropship suppliers and do everything else via your inventory management system that you’re using today, but you’re just not going to get the value out of most of the platforms out there because an order comes in, you’re not going to have the ability to determine is it also in my warehouse, in a dropship vendor’s warehouse, you’re not going to be able to route by lowest cost or you’re not going to also be able to add products to your store that exist in two locations.
So, really you need to be thinking about how I integrate my vendors, my dropship vendors, but I need to also integrate my warehouses. So instead of having to build all these out custom each time, does this platform have pre built connections? Is my internal warehouse a SkuVault? Do I run it on Fishbowl? Do I run it on NetSuite? Does this platform have a pre-built integration so I don’t have to be charged an arm and a leg for a custom integration?
3PL warehouses, I work with Newgistics, I work with Shipwire. Those are the questions you should have on your checklist. Then same thing with integrating the shipping carriers and aggregators that you use, are those already there? The other thing to think about too, is the dropship suppliers. Maybe you have five main large distributors you work with and those are your suppliers and the rest of them, you don’t do a ton of business where they’re not that important to really integrate.
Do they have pre built supplier integrations where they’ve already done this? A lot of these guys, including ourselves, have a list of suppliers that we’ve already integrated with. We’ve got 230 that, there’s probably a good chance that you work with one of them, if you found this at one point. So, that makes things a lot easier, because there’s a lot of nuance in integrating a dropship supplier that it makes sense to go with someone so you don’t have to reinvent the wheel, who’s already done that, whether it’s with one of your suppliers or all of them.
Brick and mortar, and then do they have an API to actually integrate? Can you choose to integrate or can your vendor choose to integrate via API? something important ask if you’ve got a developer or want to consider that. On the other side, on the channel side, same kind of concept. What’s your point of sale? What’s your online store? From an eBay, Amazon, Walmart standpoint, are you selling on the marketplace or are you sending via their vendor central portal?
So understanding, someone might list Amazon or eBay, but you sell through the vendor or Amazon or Walmart and you sell through their vendor program versus the actual marketplace seller program, and really determining which one they have, because they’re two different integrations.
Then really, if you’re selling into big box retail, some of those big box retailers, EDI integrations are pre built into some of those platforms as well. Now the big piece that has become more and more important in this new distributed and dropship workflow is inventory syncing. We’re not buying quarterly, we’re not buying in freight in bulk. We’re buying individual orders that are shared and pooled inventory across multiple retailers who can all buy them.
When a run goes on a certain product, and it gets popular, they can buy them right out from under you. So you need to be syncing your inventory. So the question you need to ask, how often can I sync? Can I sync every five minutes or can I only sync every hour? It might not matter because your supplier only provides hourly feeds, but then that’s the question you need to ask as well. Can I sync right on the hour? Is there a customization on how often I sync or exactly what time I sync, what days I sync?
You might think, well, why don’t you just sync as much as possible? Well, if your supplier only updates their inventory once a day, and you constantly are syncing from their feed, and you’re overriding the data that’s in your store, and you’ve had a couple orders come in, it’s obviously not a good practice, you’re going to be off. So I’m going to skip around a couple of these, I’m going to just jump right into committed stock. That’s the concept of committed stock.
So when an order comes in, and it has a skew on there, do you decrement that inventory by the order that has that skew? So there was two on that order of skew 123, skew 123 should go down by two, and then the next time that inventory runs, we should take whatever the inventory feed says is the record of truth, we should take that into account, but if we know that that only updates once a day, we should wait till that next day before we trust that inventory feed.
This is a very important piece to understand in a dropship workflow, because it’s the first time you’re dealing with pooled inventory, and the timing of that. So understanding that it’s important and making sure your dropship software can actually account for it is a key piece that will really prevent stock outs and really allow you to sell more than your competitors. Smart sync, is it actually syncing everything every time and just taking forever or is it only just updating things that need to be updated?
Because if it’s taking forever to update, then it’s going to be slower to get the new data. Then the last part here, the second the last check is the multi source, multi channel. Taking into account that just because you’ve decided to skew 123 across multiple sources, and there’s one of each, there’s a quantity one from source A, there’s a quantity of five from source B, there’s a quantity of four from source C. You’ve got 10 in total. Do you want to list all 10 on Amazon or do you just want to list the ones that are in the warehouse. There’s little things like that you want to think about.
Maybe you don’t trust your job ship supplier to ship as quickly as needed for an Amazon order. So can you build sophisticated rules to only list the proper quantity that you want for each channel? So product data and listing management. This is one that, if this is important to you, which we really see a split on how important this is for the retailers out there today and it doesn’t really matter. They write all their own descriptions and add their own images directly to their sales channel. It’s not a big deal to manage this in a central location.
As of right now, at least too, it’s everything. They need to have the product data because it’s so many skews, there’s no way they can manually do this one by one. It’s really split down the middle from who we talk with but if it does matter to you, you really, really need to kind of dig in on this, because there’s not a lot of software out there that does this very well. I would say that’s where we really focus because we see it as a differentiator.
It’s one of those things because it’s not needed by these larger retailers that have a huge team that does item set up that a lot of the traditional retail software does not really look and put too much effort here. So I would definitely say dig into this when you are demoing software. So one is, can you actually pull in data from a data feed that product? Can you automatically pull in an image link and then put that image into your platform? Are you pulling more than just price quantity status, which a lot of these guys, that’s all they’re pulling in.
Can you pull in custom attributes and custom meta fields and things like that? What can you do with that meta field that you’ve brought in? Can you push it all the way to your channel? We see this in specialty items like, if something’s hazardous or not it’s going to be in the feed, and it’s going to say this item is hazardous and your supplier is going to provide you that data. Can you propagate that data all the way to your channel, so that you can then filter hazardous items as far as in a certain category, or whatever it might be?
Can you obviously manage it internally in your software to filter those in or out of the platform of where you’re listing them, or only listing them on your store, but not listing on marketplaces, things like that. The big thing too, is this is also one that really digs into your vendors, parent child variation structure. So you can kind of see the diagram to the right there. You’ve got one T shirt and it’s really the product listing of this T shirt, but that T shirt comes in small medium large.
Is there an intelligent mapping of what the small, medium, large child products should go to one parent, and then can you propagate that all the way from the supplier feed, which is already structured like that to the channel which also requires it.
Listing on marketplaces, understanding creating a new offer versus a new listing. I think that’s fairly common terminology between Walmart and Amazon. A new offer essentially being, you’re mapping to an existing product already on the marketplace by UPC or EAN or things like that, or are you actually creating a brand new product where you need to provide the UPC and provide more details about this product that doesn’t actually exist on the marketplace.
What is your platform capable of doing? Both, just one? It can be very difficult to create new products, new actual listings on platforms like eBay and Amazon and Walmart. Because depending on what category the product is in, it can require different meta fields, if you will, or attributes where if it’s a monitor, a TV monitor needs to have certain dimensions where, obviously a T shirt is not going to require the dimensions that a TV monitor would.
So, it’s very specific to the details and the data that you need by category. So a lot of times you’re going to find that the software can only create new offers and can’t create new listings. So if that’s important to you, just understand that that’s something you’ll need to ask about. Kitting and bundling is a big thing too. You might be able to create a bundle of something or kit a product together, that’s great and list it. Can you also then complete it from an order flow perspective? Can you, it’s kind of funny terminology, but can you explode the components to then actually go and be routed appropriately to the multiple vendors you might fulfill from?
It might be a baseball helmet, a bat and a ball that comes from three different sources, but it’s one listing on the store. Can you support that workflow so everything flows automatically? Then repricing, very important for marketplace sellers to reprice the products according to the competition. If that is important to you, understanding if it’s internal to the platform, that’s great. Maybe if it’s really good repricer, but if they don’t have one integrated internally can integrate with other repricers which, a lot of times is just as good if not better because the other repricer is really good at what they do for someone that’s bundling all that stuff together, like a traditional ERP would do.
So one of our favorite pieces is the order orchestration and routing piece. This is really where high volume, high monthly order sellers can make a lot of money and can really optimize what they’re doing already. Save a lot of money as well. Whether it’s increasing margin from routing to the most cost effective source, or if it’s just sending to the closest supplier so that it’s getting there on time and improving the customer experience. There’s a lot of value that can be added here.
So, understanding what kind of intelligence is available in the platform, what is manual versus automated. If you decide to just implement dropship software and keep the rest of your workflow siloed you’re going to have to do a lot of stuff manual, you’re going to have to determine is this product a dropship product? Is it not a dropship product? Manually update it, route it. So you need to determine one, can you support the distributed order management flow and route everything through one central distributed order management system, and if you can, what does that system look like and can you do almost all of it automated?
Can you build importing and routing rules so that you can customize all scenarios? So you can say, yeah, I can automate everything but what about when it’s x, y, or z? I need to do, let’s give you an actual example. If it’s from out of the United States, I don’t want to automatically just send that to the x supplier because they don’t ship internationally. We do from our warehouse. It might be the lowest cost but I don’t want to send that to them and then I get delayed because they don’t realize it. They don’t tell me for a day later.
Do you have importing rules to automatically identify where that order is coming from, and then route appropriately or maybe put it in a pause or a hold mode. These are the kind of questions you need to be asking about, and really what you should be doing is outlining all the scenarios you think about in your business when it comes to order routing and what scenarios you think are important to you, edge cases everything, and then just kind of walking through that in the demo to identify what’s important and what’s not.
What day is available? Can you get as granular saying this, product skew starts with SK. Then if that happens to a whole different kind of routing rule set than if it’s just a regular product. Digging into those pieces. Cross docking is a big crease too, for some people. It’s a big piece for people that do it, I should say because it’s really tough to automate everything if you have to change the shipping address in the middle of the flow.
So do you support the dynamic changing of the shipping address from the end consumer to your own warehouse in certain scenarios, and then do you also suppress that traffic information so it does not go all the way back to the consumer when it’s been shipped to your warehouse and they get a delivered notification, but it’s not sitting out front side their door, it’s sitting in front of your warehouse. That’s a bad customer experience. So, if you do cross dock, digging into what that workflow looks like is very important, obviously.
Reporting on the orders, those purchase orders I talked about earlier, the reconciling of one order has multiple purchase orders, how do you actually look at if that’s profitable? That’s a big piece of dropship is understanding these items, and there’s such slim margins already. Which ones are profitable, which ones might not be, what scenarios are they profitable? Which ones are they not? So understand that reporting.
Then lastly a lot of retailers are going to be doing both wholesale and dropship. So can you leverage this platform to also send wholesale orders, which kind of touches on that bullet a couple. The orders, sending, frequency and customization, can you wait and send these in bulk for orders that come in, and then also have the flexibility to send them on demand in real time as they come in. Do you have all that capability or is this just for drop shippers or is this just for wholesale?
So invoice and accounting management, obviously you can have, there’s a lot of overlap in maybe some of the reporting that you might do in your inventory and order management systems versus your accounting systems, but one, how do you actually get the supplier invoice data? I mean, maybe you’re putting in QuickBooks and you probably want to get it there, but there might be some value to having it in your actual platform as well so you can run some management level reports there.
A lot of these suppliers and a lot of the invoicing today is going to be done via PDF. Some of the more sophisticated ones are giving CSVs which makes it easy to integrate but for the PDFs scenarios, which a large portion of the industry, in many industries I should say, still work off PDFs. Do you have conversion software, can they provide a conversion PDF conversion piece for you? Questions that you can definitely ask. I wouldn’t just assume that it’s a PDF, I can’t integrate it, because those are possible.
What accounting platforms like we talked about, and then obviously, just really mapping out what you need, because there’s a couple different ways you can integrate with your accounting software, depending on how you use it. So be sure to clarify how you use your accounting software and where you would see the data integration happening. So just be sure to kind of clarify that piece, because there’s a couple different ways you can do that.
Then what else is pulled in? Is tax pulled in from your channels, or do I need to go get that? Is my Amazon fee going to be pulled in or do I need to go find out and export that from Amazon? All kinds of questions that once you’re on board and you start scaling up with this platform, those little things are going to make a difference in just management reporting.
So returns and refund management. With this, it’s not typically an automated flow. In a lot of cases, you can automate some pieces of it, but it’s good to know how this is actually managed in your platform. So what is actually pulled? You can automate from the channels, if someone returns something via your Shopify return process, you can automate that, like update of status to the order that, in your order management system and kind of automate and integrate that piece.
So understanding what’s being pulled from the channel, and if there’s any automation there, but also on the other side, on more on the source side, when you decide, yes, this is a return that we’re going to accept, we’re going to move forward with, I now need to send them a return label, but I want my vendor to provide that or I’m going to provide it but it needs to have my vendor’s address, how does that work? Kind of digging into that side of things.
What kind of rules can you write, and then really, from a refund perspective, how much is actually managed in your own system or what is at least synced with your accounting integration? Obviously, your books need to reconcile. So if you give a full refund or a partial refund in an order, you need to know how to reconcile your accounting stuff. The last one we have here, it’s kind of interesting because the marketplace model is really picking up, and then also we have this B2B membership model, but essentially, kind of the supplier dropship side of things we talked about, where you’re kind of you own the inventory as well.
These are both kinds of two models we don’t really touch on but have unique needs. So just to kind of wrap up the webinar here on these last couple pieces. So the B2B membership model is really you managing your reseller network. It’s more of that dropship supplier platform and software functionality we talked about earlier on in the webinar, but what are you doing from an order manager perspective and how are you receiving orders?
If you’re working with a larger retailer, can you receive orders automatically, and does your dropship platform support the supplier functionality that we kind of talked about. Receiving automatic orders via EDI or API? Is that capable? If you start working with a Target or someone like that, they’re not going to want to log in manually and type in an order for you. They’re going to want to send it to you automatically. So can you do that? Can you accept orders in that way, and then that’s a case, how do you generate invoices?
Because you need to generate the shipping cost on the fly, you need to generate the dropship fee if you have one. It’s very common to say if it’s under $50, I charge a $3 dropship fee, if it’s over $50 I don’t charge any dropship fee. How do you do that? If people aren’t manually going through a checkout process and they’re sending you an automatic order, how do you make that logic automatically kind of apply to your invoices and then have that retailer agree to that final price?
That’s the kind of stuff that you should be thinking about, and then from a payment method, if you do have a dealer portal for your resellers that’s kind of set up, can I use my payment method? Then also, this should allow me to onboard new resellers. Not only, we talked a lot about vendor onboarding, but on the opposite side, on the right hand side of the equation, how do I bring on new resellers? What’s the management capabilities of that? What’s the signup workflow look like?
Then for the marketplace model, this is more on the left hand side, you’re managing a vendor network of marketplace vendors. It’s very similar to the traditional dropship retailer needs that we talked about but it’s a little bit different in who sets the pricing. A lot of times the vendor is actually setting the pricing, and you’re taking a commission of that. Those flows are a little bit different than traditional B2B supplier retailer relationships. So, how do you generate that invoice? How does it automatically happen from a pricing perspective, and a payment perspective?
So if you’re a marketplace model, dig into that. It’s good to know. Vendor and shipping return labels, obviously, from a vendor portal, and then what kind of unique packing slip needs you might have for your vendors. So with that, that is kind of our full checklist for how to evaluate dropship software, and kind of a little bit more on the ecosystem in general. I’m going to pull up, it looks like we did have a couple questions come through.
So I’m just reading through this first one. So looks like I’ve got kind of a question more about recommending specific software. I’m going to hold on to that one, and I’m going to go ahead and I’ll follow up with you directly on that. I really don’t want to recommend specific software here on the webinar. I want it to be as educational as possible. Obviously, we’re going to be biased on that. So I’m going to hold off on that. I got another one here, though. How does the POS system integration work with dropship?
So the POS system, it really depends. We talk about sources on the left hand side and channels on the. Sourcing where you’re pulling products or product data, or where you’re sending orders to on the left hand side, and channels being where you’re selling the product with the transactions happening with consumers. So if you are, it can really happen on both sides of the equation.
A POS system, let’s start with the channel side where you’re taking an order in store and you have a POS in store. You can set it up as a channel and just like you would take an order from online store, and you can basically, it’s almost like the model you walk into an auto parts store and they say, we don’t have that here in store, but I can order it for you from one of our vendors and it can be here in three days.
That’s how you would use POS from a dropship perspective. That’s what you’d want to do. A lot of people don’t integrate the POS side, just because they don’t want to dropship out of their store, but if you do, then that’s how you’d integrate that. The other side of things is if you’re selling something online, and you want to do pick up in store, and you manage all your inventory and orders and your retailer associates that are in the store, manage everything from a central POS and you want to send an order into the same central order management system you’re used to looking at every day, then you would send in an order from your online store to the POS system, or whatever central management system that’s backing that POS system, to then do a pickup in store kind of order.
So it can really be on both sides. Then we’ve got, looks like one more. How can I tell if a platform supports product data? You really just have to ask. You have to ask, if I have a dropship feed, even if you have an example, it’d be great to say, here’s an example feed I have, here’s a CSV file. Would you be able to integrate all this data? How do you handle images? Then when it comes to, they can integrate from the left side, pulling from a source to the main central platform, but then how does that data get propagated to the sales channel?
You can ask, okay, do you create new listings on marketplaces or just create offers? Also, I have special fields. You can import your CSV and say, this hazardous column says yes or no. Can I push that all the way to my Shopify store and what would that look like? Would it be a tag, would it be a product tag? Things like that, getting specific would be the best way to do that with the sales rep you’re working with from that company.
Okay. I don’t see any other questions coming through at this time. Yeah, I think that’s everything guys. I really do appreciate it. We took the full hour. I know it was a lot of information, but I know this was a highly demanded webinar. We had a ton of attendance, which is great. Love to see everyone’s still here on the webinar. I really do appreciate everyone’s time. With that, we are going to be following up. We’ll be sending a recording to your email here probably the next day, and you’ll have it there so you can watch it again if you’d like, and that’s it.
Thanks, everyone. Have a great day.