Dropshipping is rapidly evolving to become one of the most popular means of doing business online. As more retailers venture into the world of dropship they realize that the business model has significant benefits as well as different challenges than traditional retail. Like any other industry, as the dropship model matures, retailers are turning to software to streamline how they run their business, specifically by using dropship automation software.
What is dropship automation software, and how does is it fit into the dropship retail model?
So you're probably wondering: what is dropship automation software, and how does is it fit into the dropship retail model? Let’s start with some quick background.
What is the dropshipping business model?
To understand where dropship automation software merges into your ecommerce business equation, you should first fully understand how the dropship business model works.
When a customer places an order on your online store, the order gets sent to your dropship supplier (either manually or automatically) to be fulfilled. Your supplier then sends out the order directly to your customer. You are only charged the wholesale cost of the product, which is where you make your profit, and you only pay when an order is placed. You can learn more about this process and the benefits of dropshipping in our “What is Dropshipping?” Guide.
So, now you may be thinking, how then do I manage my dropship inventory and orders?
Dropship Inventory Management
Efficiently managing your dropship inventory is crucial to running a successful dropship business. When syncing a dropship supplier’s inventory into your ecommerce store platform, you will be utilizing an inventory data feed. These data feeds can come in multiple file formats, such as CSV, TXT, XLSX or XML, which are often provided on an FTP server, an HTML link or in some cases, a daily email from your supplier. As a more advanced option, inventory data feeds can also be implemented over an API/EDI.
There are three ways to go about uploading these data feeds into your store:
1. Manual Import
This means you would be uploading your inventory into your store platform daily in order to obtain the most accurate and recent data. As you can imagine, this can be a time consuming and tedious process to do every day, but it is more common than you think.
2. Custom Script
Another option, if you don’t want to manually upload your data feed every day, is to hire a developer to write a custom script that can do this automatically for you. But, the downside is that writing custom code is typically an expensive process, tough to maintain, and often unreliable.
BUT, have no fear — this is where dropship automation software comes in for your inventory management needs, which brings us to number three...you guessed it:
3. Dropship Automation Software
This type of dropship software can automatically sync your supplier’s inventory feeds into your online store multiple times a day, saving you a lot of time, headache and money. Not only can it automatically sync your data feed, but you can also easily manage and customize your product feed right within the automation software.
This type of dropship software can automatically sync your supplier’s inventory feeds into your online store multiple times a day.
It is clear what option offers the most in terms of functionality and ease-of-use, but the benefits of dropship automation software doesn’t end at inventory management.
Managing Dropship Orders
When running your own dropshipping business, having a game plan for how you’re going to handle your orders is imperative to gaining repeat business and effectively operating your online store.
There are a few ways you can manage this, and some of it depends on what supplier you are utilizing:
Some suppliers don’t require any formatting when it comes to submitting orders via email, but others require a formatted attachment, such as within a spreadsheet. Most of the major ecommerce platforms allow you to automatically send email orders to your supplier once they have been placed - only if they don’t require a specific file format attachment.
Sometimes suppliers will only accept orders that are placed on their website or through a “Dealer Portal” located on their website. While this can be simple, it is a very manual process and can take a lot of your time.
As with inventory data feeds, if a supplier allows you to automate your orders through an API or EDI, it is almost always a requirement to hire a developer and develop custom coding. This custom coding, as we learned before, can break and require regular maintenance, which can get expensive.
Similarly with automating orders via an API/EDI, FTP order automation requires the work of a developer to automatically send an FTP file to your supplier once an order gets placed.
Over the Phone
As you can imagine, this is a time consuming task that has large room for error. Without help from an assistant, over the phone orders is not usually feasible for an expanding dropshipping business.
Dropship automation software can make your life a whole lot easier when it comes to automating and managing your orders. This type of software takes care of the hard stuff for you — i.e. the coding and the maintenance. This will save you precious time and money, which is critical when starting a business.
Dropship automation software can make your life a whole lot easier when it comes to automating and managing your orders.
Once an order gets placed, the order information goes into an order management system within the dropship automation software, which subsequently sends it out to your supplier. Once the supplier ships the order, the tracking information is then sent back through that order management system, which will then push it back to your store and customer. No emailing, no calling and no hiring of developers.
Why is dropship automation software important?
So, with all that being said, I think this answer is pretty clear. The utilization of dropship automation software is incredibly important, especially when you are trying to quickly scale your dropshipping business. Time is money, and hiring out tech work is expensive. This is the one solution that truly covers your dropshipping business from A to Z — from uploading inventory, to fulfilling your orders automatically.
Have any questions about dropship automation software? Ask away in the comments!