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Drop shipping software provides businesses with access to drop shipping companies from a single platform. Drop shipping allows an e-commerce business to offer products without building an extensive supply chain to produce, house, and ship items to customers. The drop shipper manages those aspects while the user of the software selects items to feature in their online store. Many drop shipping platforms integrate with e-commerce platforms, allowing users to build a store on the platform of their choice with the advantage of access to wholesalers.
The appeal of drop shipping is the low overhead, but often the profit margins are much tighter than a typical e-commerce business model. However, drop shipping software provides access to drop shipping companies, sales, and order fulfillment all in one place.
Key Benefits of Drop Shipping Software
Drop shipping software is ideal for users setting up an e-commerce store with few resources. A small company can easily set up a business using drop shipping software or dropship automation software. When the whole point of using the drop shipping model is to reduce touchpoints and the supply chain, drop shipping software makes it easy to choose a supplier and add a product to an existing e-commerce store. Those running the e-commerce store still handle customer service, while drop shipping software handles the majority of the logistics once an order has been placed.
Scalability — The advantage of using a drop shipper is that their infrastructure is already in place and you are using it as needed. This makes it easy to scale, since you are not building the supply chain. Most drop shippers ask that a retailer pre-buy a set number of items to make it worth their time and money. For the retailer, scaling can simply mean buying more product up front.
Low overhead — With drop shipping, the overhead required to start an e-commerce business is reduced significantly. While the margins are much tighter than a traditional retail business, the low overhead makes it much faster and easier to set up. By removing the cost to maintain a supply chain and fulfill orders, drop shipping software makes e-commerce much more accessible.
Quick setup — Along with the low overhead, drop shipping software makes it quick and easy to begin selling items on an e-commerce store. Many drop shipping platforms integrate with e-commerce platforms, and users choose what they want to sell, import it to their store, and purchase any stock up front. The drop shipping tool covers the order fulfillment on the back end and interfaces with the drop shipper directly, making it easy for users to create a relationship with various drop shippers.
E-commerce business owners — Business owners who want to quickly start selling items without setting up an extensive supply chain can use drop shipping software to get up and running. Drop shipping software is specifically designed to work similarly to a marketplace, so users can choose items to feature in their store based on a variety of metrics such as market value, bulk price, product reviews, and shipping speed. By making it easy for users to select and feature products in their store, drop shipping software streamlines the e-commerce process for those who do not have the resources to build their own supply chain.
Drop shippers — Drop shippers use drop shipping software to find clients and fulfill orders placed by customers of the retailers featuring their products. The back end of drop shipping software also often handles order fulfillment, providing shipping details for the products ordered. Drop shippers can then stay organized and fulfill all orders in a timely manner regardless of how many individual retailers are offering their products.
Marketplace features — Some drop shipping software function much like a marketplace, housing products from a variety of drop shippers that users can choose to feature in their own stores based on price, product reviews, and other metrics.
Product reviews — To help users make informed choices about which products to add to their store, some drop shipping platforms include product reviews from customers. Users may also have the option to allow their customers to write product reviews. Reviews from other retailers may also be featured.
Order fulfillment — Since the retailer is not actually fulfilling customers' orders, drop shippers need a way to easily and accurately fulfill orders. Order fulfillment features provide the drop shipper with a customer’s order and shipping information, allowing the drop shipper to closely track orders.
E-commerce platforms integration — Many drop shipping platforms integrate with e-commerce platforms to create a seamless experience for both retailers and customers. By integrating with e-commerce platforms, drop shipping platforms can easily export products to an online store, and crucial information from the customer can be easily communicated to the drop shipper to fulfill the order.
Fee calculator — The ability to automatically calculate taxes and shipping fees benefits both customers and retailers. Retailers need to stay compliant with local tax laws to remain in business, and customers want to know how much they are paying for shipping up front. Drop shippers also need to receive those shipping fees since they are often housed overseas where shipping and customs fees to the United States and Europe are more expensive.
Automation — Some drop shipping software has the ability to automate certain processes such as order routing to manufacturers. Automating these tasks makes managing the business easier for retailers and fulfilling orders easier for drop shippers.
Inventory tracking — Since business owners are not selling their own inventory, their inventory availability is dependent upon the drop shipper. With inventory tracking features, retailers can know in real time whether certain inventory is available. This allows retailers to update their store as needed so they are not losing revenue selling products that are not available to customers.
Marketing tools — Some drop shipping software contains marketing tools to help retailers promote their store and the products they offer. This can take the form of targeted emails or social media posts.
Small margins — The downside of the low overhead of using drop shipping is that the margins are much smaller than manufacturing your own products. While manufacturing and building a supply chain are much more expensive up front, the upside is the money saved in the long run. Using a drop shipper’s infrastructure comes with higher costs for products, meaning that the potential profit is much lower per unit.
Low control — Using a drop shipper means that the retailer has little to no control over the availability of their inventory, the quality of their inventory, or how quickly it ships. All of that is in the hands of the drop shipper, making the retailer the source of where customers purchase products. This can be helpful for a busy retailer, or frustrating for both retailer and customer. If there is a large delay, the onus is on the drop shipper to communicate that to retailers so they can relay that information to customers.
Product quality — Lack of oversight into the manufacturing process means no oversight into the quality of the products being sold. Many retailers order a sample before they offer a specific product, but a single sample is not a good indicator of quality over time. Because retailers have no quality control, quality may vary wildly.
Customer service — The retailer is the face the customer sees, so the retailer acts as a mediator for the customer and the drop shipper. If there is an issue with the drop shipper that affects a customer’s order, the drop shipper must let the retailer know so they can inform the customer. That may not always happen, which can mean angry customers. As a result, a retailer may lose business.