Thriving in this Pandemic #4: The Strategic Value of Drop Ship

Answers to Your Most Common Questions

This blog post is part of Shoptelligence’s “Five Ways to Thrive” series designed to help furniture retailers with pragmatic ways to grow during this pandemic.

You spend a lot of money building your web traffic, and those marketing dollars aren’t cheap. Once you’ve got a customer on your site, you don’t want to lose them because you don’t have the products they want. The solution is to leverage drop ship programs.

Drop ship programs provide retailers with greater selection, which can translate to a higher share of the consumer’s wallet for very little incremental cost since you aren’t purchasing products in advance and warehousing them. Programs are facilitated by real-time access to inventory data through an API feed. Drop ship vendors can ship items to your store or directly deliver them to your customer, shortening lead times to ensure speed to market that consumers demand. And since you’re already spending money to drive shoppers to your site, drop ship doesn’t add incremental marketing costs.

Drop ship programs make sense for retailers, especially in today’s climate, says Ron Sellers, co-founder of ecUtopia and senior vice president of TrueCommerce-ecUtopia, the largest provider of supply chain automation in home furnishings industry.

“Why wouldn’t you do drop ship?” he asks. “Our world has been turned upside down and the idea of getting the same foot traffic in your store is not going to happen for a long time. First and foremost, retailers in the home furnishing industry must be selling online. If you’re doing that successfully, there’s no reason not to do drop ship.”

How does a drop ship program work?

“Drop ship programs help retailers expand selection on their website without the investment in additional inventory,” explains Janice Yeh, director of business operations for Coaster Fine Furniture. “Vendors that drop ship for their retailers, broaden selection and manage inventory to reduce the dealer’s carrying costs. Once a consumer places an order on the dealer’s website, the vendor can arrange delivery, allowing for shorter lead times. The dealer can now focus on providing great customer service.”

The drop ship process is invisible to the customer, says Sellers. “The drop ship company will print the receipt and shipping label with the retailer’s information,” he says. “They will push the information back to the retailer who sends the information to the consumer via email so they can track the order. The retailer takes ownership of the item in the wind as it enters the shipping stage.”

Are drop ship programs for brick-and-mortar retailers?

Yes. In fact, brick-and-mortar retailers have an advantage, says Yeh. “Large ecommerce retailers don’t have that personable experience—they have call centers,” she says. “Smaller retailers can be there to answer questions, creating a more reassuring experience. And they have the huge advantage of being able to service or deliver LTL (less-than-load) shipping, which is not something ecommerce retailers can do.”

Too often, retailers try to beat Amazon, but it’s better to stay in your lane, says Yeh. “Amazon is good at what they do, and that’s why they dominate the market,” she says. “Nobody can get better rates on small parcel. Smaller retailers should focus on the LTL space. Anything bigger than an accent chair is better suited to be handled by brick-and-mortar retailers that can offer white-glove delivery. Amazon or Wayfair are missing the last-mile service and the local touch.”

And the vast majority of shoppers love to shop online, go see it in the store, and come home and make the decision later in the day, adds Sellers. “This is where brick-and-mortar has the advantage,” he says.

How do you get started?

First, a retailer needs an engaging website with a shopping cart. Next, you’ll need to establish a relationship with a drop ship vendor and be approved. You’ll also need the ability to work with an API feed that will pull the products from the drop ship company site and populate products on yours.

Retailers need to understand their vendors’ inventory levels in order to proactively manage the drop ship items you have on your website, adds Sellers. “You need to update the feed on a daily basis,” he says. “If an item is out of stock from the manufacturer and you don’t remove it from your website, you may create a broken promise. If you do that right and have good website, you can offer and sell more products.”

When an order is received, the retailer needs a way to communicate it to the drop ship company. This process can be automated through your POS, but it can also be done through email.

How do you choose products that work well for drop ship?

A good place to start is with your vendor. “Ask for their ten-top movers,” says Sellers. “If you’re just getting into drop ship, you can start with accessories, get your feet wet, and expand from there. Rely on the expertise of the vendor’s merchandiser and their reps.”

And focus on large pieces, says Yeh. “They’re the Achilles heel for Amazon,” she says. “If you want to beat Amazon, that’s the way to do it. Brick-and-mortar stores are strong in that area.”

How can do you maximize the effectiveness of a drop ship program?

While it can be tempting to add a drop ship company’s entire product feed, Yeh doesn’t necessarily recommend doing that.

“It can be overwhelming for the customer,” she says. “Having too many options creates decision fatigue for the customer. To do it right, go through the merchandise and find the items that fit your brand. Then present them in the best way possible. That’s where Shoptelligence comes in. It suggests items that are the same style and go together to help retailers figure out what to carry. And it recommends similar items when something is out of stock.”

In addition to presenting a cohesive product line, your drop ship program needs to feel seamless for shoppers.

“The consumer should have one experience—the experience with your store,” says Sellers. “When the box arrives, it should look like it came from your store, with the documentation that has your branding. The customer should have the warm feeling that they made the purchase with someone they know.”

And retailers need to treat their website and drop ship program as a location and not an add on, says Sellers.

“You wouldn’t build a 50,000-square-foot showroom and not staff it properly, he says. “Retailers need to do the same thing with their website and drop ship program with a dedicated staff to make it happen. Our industry was hit hard during the pandemic, and it’s not something that will be fixed right away. If you don’t use technology to cross the chasm, your competition will and they’re going to eat you for lunch.”


About the Contributors

Ron Sellers, co-founder of ecUtopia and now SVP of TrueCommerce-ecUtopia, is a technology advocate and leader for the home furnishings industry. With more than 25 years of industry-related experience, he offers significant expertise as a committee member of the Home Furnishings Association (HFA) and sits on the Executive Advisory Council for WithIt, a women’s leadership development network for the home and furnishings industries.

Janice Yeh is Director of Business Operations for Coaster Company of America. She is responsible for the integration of product development, import, domestic warehousing and distribution. Janice was recognized by Home Furnishings Business as part of its “40 influential people under 40 years of age.” In 2019, Furniture Today and Women in the Furniture Industry recognized Janice with special distinction as one of the first inductees to “Woman of Influence” in home furnishings. Janice and her team are fully committed to developing digital platform integration tools to enhance consumer-facing content for its traditional retail network. Coaster continues to incorporate Shoptelligence into its institutional marketing initiatives.

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