While dropshippers do not hold onto their own inventory, they still need to monitor their suppliers. This is where dropship inventory management factors in. If you own a dropshipping business, inventory management will mostly involve syncing data from your suppliers to your online store.
This is crucial because you don’t want your customers to check out items that are out of stock. You’ll also want to ensure that you have adequate stock to meet customer demand. As such, your suppliers will provide a data feed of products with key information like:
- Product identifier (SKU)
- Product titles
A refresher on dropshipping
Dropshipping is a popular e-commerce business model. Unlike brick-and-mortar stores, dropshippers do not physically maintain their own inventory.
Instead, dropshippers partner with a third-party vendor, such as a wholesaler or manufacturer, who can produce, store, and ship all the retailer’s products directly to the customer.
The dropshipper then takes the customer’s orders via an e-commerce platform, forwards them to the supplier, and the supplier then completes the purchase order.
Some of the more popular dropshipping e-commerce platform sites include:
Advantages of dropshipping
Some of the benefits of dropshipping include:
- Ease of entry: It’s much easier to run a business that doesn’t require you to handle physical products, and dropshipping saves you the hassle of having to deal with managing warehouses and fulfilling orders.
- Can be managed remotely: Running a dropshipping business can be done from virtually anywhere you have access to a laptop and the internet.
- Overhead Cost Savings: Overhead expenses are much lower because you don’t have to pay for warehouse costs, nor do you have to purchase inventory from multiple suppliers.
Disadvantages of dropshipping
There are also a few downsides to dropshipping, which could include the following:
- Liability for supplier’s mistakes: Dropshipping makes you liable for any mistakes your suppliers might make.
- Little control over shipping: Since the products aren’t coming straight from you, you have minimal control over shipping.
- Highly competitive: Some dropshipping markets are overpopulated with retailers, making the competition extremely high.
Managing your dropshipping inventory
Managing inventory as an e-commerce business can feel overwhelming, but it doesn’t have to be. There are two basic ways for e-commerce companies to track their inventory:
- Automatically: Tying all your e-commerce channels together into a central hub that manages your inventory is a more comprehensive and convenient solution than trying to manage them all separately. This includes using a warehouse inventory management software that you can use to manage all areas of inventory.
- Manually: When you sell products on multiple e-commerce channels, you may have to go through each site manually to update the number of products left in stock, especially if you’re still using manual inventory tools like Excel or similar basic setups.
Why is inventory management important in dropshipping?
While inventory management is a crucial aspect of any business, it is especially critical in dropshipping. If you have multiple suppliers, managing inventory is much more complex and would require you to closely monitor everything to ensure customer satisfaction.
Inventory management software gives you control over operations and holds suppliers accountable, as you have visibility over their inventory and fulfilment schedules. This lets you communicate realistic delivery information to your customers and update them on any issues or delays.
With the help of inventory management software from a reliable provider, you can view and sync important supplier data in real-time, no matter where you are.
If you are interested in learning how Fishbowl’s flexible inventory management solution can help your business now, you can book a demo.