Key Questions to Ask Potential Drop Shipping Partners
Working with a drop shipper is a great way to get product to your customers without incurring the costs of maintaining inventory on hand. When the shipper is also the manufacturer, you’ll save a lot of money on transportation and storage charges as product can go from factory to customer without visiting your warehouse in between. With that said, different drop shippers have different policies. To make sure you understand the parameters within which you’ll be working, here are some key questions to ask a potential drop-shipping partner.
1). Are you a retail drop shipper or a wholesale drop shipper?
You want to work with your drop shipper on a wholesale basis. In addition to giving you additional room for profit, wholesale drop shippers list your company name on all packaging and invoices so it looks like the product came from your company rather than the shipper’s.
2). Is there a drop shipping fee, or is it included in the price?
If it’s included in the price and you have a healthy margin after you pay it, you’re in good shape. If the prices don’t include the shipping fee, your profit just decreased by the amount of the fee for each product shipped.
3.) Will my company information be on the packaging and the packing slip?
As you’re learning how to create an ecommerce website, you want to make sure all goods appear to be coming directly from your store—as opposed to a third party of which your customer has never heard. This gives your company more veracity in the eyes of the consumer; it also eliminates any confusion in terms of handling returns and refunds. Which brings us to—
4.) How do you handle returns?
Your customers are more likely to have faith if you offer a generous return policy. It says you’re willing to stand behind the product if something goes wrong. If your partnering company won’t accept returns, this will be difficult to execute. You’ll have to decide whether the drop shipper’s offerings outweigh the benefit of giving your customer a return option if they are dissatisfied.
5.) How do you handle products damaged in transit?
Will they just take your customer’s word for it, or do they require the customer to submit proof of damage before returning the product? Ideally, if you’re trying to run a customer service oriented enterprise, you want no questions asked. The customer returns the product and gets a refund or a replacement—period.
6.) What kind of turnaround time can you count on?
While consumers know shopping online entails a bit of a wait to get their hands on items, some of the bigger companies (read: Amazon) have opened satellite distribution centers in major metropolitan areas for their most popular items. This enables them to offer overnight—or even same-day delivery. While you might not have to compete on that basis yet, it’s a tough advantage to overcome when your shipping partner is working on a three-day or longer turnaround.
7.) Do you have a minimum order requirement?
If you have yet to build a client base, it’ll be really nice to work with a dropshipping partner who has no minimum order requirement. That way, you can build your business gradually, without worrying about hitting your drop shipper’s minimum order targets.
Other key questions to ask a potential drop-shipping partner include details about the invoicing process, whether you’ll get advance notice when a product is out of stock so you can list it as such on your site, and who to contact if there are issues.
If you get satisfactory answers to all of these questions, you’ve probably found a good drop-shipping partner. However, before you enter into a contract, make sure all of your concerns are addressed. Ultimately, you should conduct your business the way you want to, rather than the way you have to in order to accommodate your drop shipper.