When you're looking to add dropshipping to an eCommerce store there is a very specific set of information that you need to get from the supplier so that you can decide whether it makes sense to work with them, and if so, for which products. The root of the issue here is that you need to do some math to decide whether it is worth working with a particular supplier. This decision is based on things like non-stocking dealer product cost, shipping cost, shipping times, and how returns are handled.
In a dropshipping setup your business has the relationship with the customer, you charge them, you send them the receipt, you are responsible for product delivery and customer service. This means that you need to carefully consider how the whole experience works, and how you remain profitable, when working with a dropshipping supplier.
Here the list of things to ask for when working with a supplier representative to determine whether you want to engage in dropshipping with them:
- Get the list of products that are available for dropshipping, and their dealer cost (which is likely different than when you order a truck full as a "stocking dealer")
- Find out how shipping works, who are the available carriers, how you are charged for shipping costs, and how shipping costs are calculated
- Ask how orders are submitted and how you receive shipment tracking IDs
- Ask how you will be kept up to date on order stock levels so that you can avoid orders for products the supplier has backordered
- Ask how recently a product was out of stock and how long it took for that product to come in stock
- If you want to sell specific products, ask about them specifically
- Ask what the payment terms are and how you will make payments. Some will want payment upfront while others will extend net-30 or net-60
- Understand how returns work, what the terms are, the cutoff dates, and restocking fees. Get bonus points for asking how refunds and charges work on returns
- Ask if they support integration between your shopping cart system and their order system and if so, how
With this information in hand you can start to make a decision on whether it makes sense to work with this supplier, and if so, for which products. Remember that you're in this to make money and in a dropshipping arrangement the money is different than if you also stock products. The amount of time you spend per order can be different as well, since you or your team will need to work in a new way when a dropship order comes in.
Keep learning about dropshipping by reading the next post which gives you the exact considerations you need to evaluate when making the decision to work with a supplier.