Are you Drop Ship Ready?

Ecommerce is taking over the retail market and retailers are adapting with a drop ship model. “E-commerce continues double-digit growth, with online shoppers planning to use all digital devices more in the future” (“UPS Pulse of the Online Shopper”). Drop shipping also known as direct-to-consumer fulfillment is used by retailers to minimize or eliminate inventory. Consumers purchase online through retailers such as Hayneedle, Nordstrom, Target, or Walmart while the supplier fulfills and ships directly to the consumer. Initially, it may be overwhelming for suppliers to adopt this model … who will sell your product, how will you ship to consumers, what shipping companies will you use, how will you fulfill orders, how will you be EDI compliant, how will you find a drop ship EDI provider … all while keeping costs low.

Retailer EDI Compliance

Most if not all retailers will require EDI compliance to simplify order processing and increase productivity. Suppliers may receive a list of EDI providers from the retailer or be referred to search the web. This leads the supplier down the path of researching the EDI options and learning new terminology. A few questions to consider while researching EDI companies are:

Does the EDI provider have a drop ship program?
How many retailer connections?
How many retailer drop ship connections?
How long does it take to be EDI capable with retailers?
What EDI documents are required?
Is there an option to integrate with shipping companies?

These questions are helpful when evaluating which is the best EDI for your company while remaining affordable, reliable, and scalable.

Drop Shipping Methods

Drop ship adds another element for suppliers: shipping. Drop ship suppliers can easily manage activity, fulfill orders, and print labels within minutes of receiving a purchase order. EDI streamlines the ordering process and drop shipping for retailer and supplier: the supplier receives the 850 Purchase Order, acknowledges the PO with an 855 document, fulfills the order, and sends an 856 Advance Shipment Notice with the tracking number (Figure A). There are integrators that will auto-populate the tracking number into the ASN which eliminates the need to manually enter the tracking number and decreases the likelihood of errors (Figure B).

Figure A. Drop Ship Process

Figure B: Shipping Integration

FedEx & UPS integrators input the tracking number on the Advance Shipment Notice (856) and auto-generates the label.

Drop Ship Returns

A defining factor for customer experience is the return process; “88 percent of shoppers review a retailer’s return policy throughout their online shopping experiences, with 66 percent doing so before purchasing” (“Return Shoppers by Rethinking Your Online Returns”). Integrating EDI into your return process will improve customer experience which in turn creates a loyal customer. Review your policy with retailers and aim for ease of returns.

Customer Experience

Agility is key for ecommerce. EDI creates an efficient and streamlined ordering process for a smooth experience for the supplier, the retailer, and most importantly the customer. “Delivering a stellar customer experience from point of sale to post-purchase across all channels is required to thrive in the competitive world of retail” (“UPS Pulse of the Online Shopper”). With retailers taking on ecommerce while still maintaining brick-and-mortar, it is crucial to be ready for drop shipping.

^References:

^{“Return Shoppers by Rethinking Your Online Returns.” Improving Online Return Policy | UPS United Problem Solvers™, UPS, solvers.ups.com/return-shoppers-by-rethinking-your-online-returns/.}

^{“UPS Pulse of the Online Shopper.” United States Parcel Service of America, Inc., June 2017, solutions.ups.com/rs/935-KKE-240/images/UPS-Pulse-of-the-Online-Shopper-2017-Volume-1.pdf.}