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When selling online, it is often the case that companies do not want to freeze their income to store products from suppliers. This situation is often the result of a slower process of goods flow. Companies also face the problem of a long time that needs to be taken to fulfil the orders, caused by waiting for the delivery of products from the supplier. The dropshipping logistic model is the solution to this problem.
In this model, the order is sent to the customer directly from the supplier’s warehouse. The online store’s task, on the other hand, is to accept the order and redirect it to the supplier in order to deliver it directly to the customer. Sales profit in this model is achieved by imposing a margin on the wholesale price.
Process
The first step in creating a dropshipping logistic model is to collect information about the product offer from the supplier. Later, these products are imported into the admin panel of the online store. As the supplier’s product offer changes, it is a repetitive process. The next step is more complex because you have to map the structure from the supplier’s website into the structures in the e-commerce system. This takes several stages – mapping of producers, categories, VAT rate, profile fields and imposing margins for individual categories.
In order for business partner’s products to be properly displayed in the online store, a series of mappings should be defined first. One of them is mapping external producers from the dropshipping partner system into producers defined in the e-commerce system. The most important mapping, however, is category mapping. It allows you to associate the categories defined in the dropshipping system with the categories in the store. Categories are understood as product types, e.g. shoes – high heels, jackets – down jackets. During the category mapping process, margins are set as well. Taking into account the price in which the product was bought from the dropshipping partner, a margin expressed as a percentage may be imposed. This value is used to calculate the suggested sales price of the product in the admin panel. Assigning the margin is a guarantee of making profits on the partner’s products in a given category, without the need to manually set and later monitor sales prices.
A minimum margin is also set, in case the price from the producer has risen above the defined price in the store. The warning about this situation will then be displayed in the administration panel. Then, the partner’s VAT rates and profile fields are mapped to correspond to those in the online store. This is a very important operation because it allows you to display product parameters later in the store. Profile fields contain information, such as a colour or material from which the product is made. In the admin panel, in the mapping settings tab, the product import can be blocked, when the mapping data does not coincide in 100% with the supplier’s offer.
When all the products from supplier’s offer are mapped into the admin panel of the e-commerce system, they can be displayed in the online store, where they can be viewed by a potential customer. The publication is very simple, it only takes one button. Then, the previously mentioned variants, profiles and product photos are set. Later, the time comes to synchronize prices and stocks in the store, which will be periodically refreshed using the shared API. After setting the margin, the products are ready to be displayed. The online store administrator can also manually manage discounts on the supplier’s products using the e-commerce system functionality.
When adding the product to the basket, the system automatically checks its availability at the dropshipping partner’s warehouse. If the product is not available, a message is displayed that it cannot be added to the cart. Hence, payment for an order that a dropshipping partner cannot fulfil at a given time will not be accepted. In the cart, a visual division of products into dropshipping partners is displayed, along with a information explaining why the order is divided. The user of the online store is also informed that the selected product will be sent in a separate package if it belongs to the offer of a business partner. Despite the division, the whole order can be paid in one transaction, regardless of whether there are the products of the actual store or its external suppliers.
Benefits
The logistic model – dropshipping – brings a lot of benefits both to the company that owns an online store and for the customer. One among others is a possibility to expand the product offer, without the need to invest in reserves, as the payment for the products can be made after finishing the transaction by the customer. Limited assortment onsite means lower warehousing costs, which normally include for instance rent, more employees and security costs. The costs of shipping packages to customers are also lower because some of them are taken over by dropshipping partners. The customer ultimately receives the order earlier, because it is delivered to him directly from the source. Dropshipping is a solution both for the B2B and B2C sales models, that supports the company’s logistic processes.
