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Why Do I Need Dropshipping Inventory? the Truth and the Facts

Blog, eCommerce Insights | March 18, 2021

So you’ve chosen your niche, started your dropshipping business, and are making some good sales, possibly over 20 a day! But what about if you are still busy with your day job, families, and other pulls on your time and are looking to streamline the process a little?

 

There are many ways to automate your dropshipping venture to free up your time and make sure your customers are getting a seamless outstanding service to keep your competitors at bay.

 

In this article we are going to look at some of the ways in which good inventory management can handle orders easily, add to your service and make more profit.

 

Why do I need inventory management? If you take 20 or more orders a day, expert inventory management can streamline and speed up the dropshipping process. Synching ordering from customers, tracking, and inventory levels, will service and fulfill orders efficiently without manual errors, so you can give customers real-time information.

 

Ok, so we have the mini takeaway in place. So that you can understand a little bit more about why you need inventory management to help take the strain out of running your dropshipping business, let’s first start by exploring what great inventory management is.

 

What is inventory management?

In a nutshell and in its simplest terms, Inventory management refers to the strategies and some of the ways dropshippers fulfill orders.

 

This can include many processes, such as:

 

  • Instructing your supplier to fulfill orders,
  • Syncing orders
  • Tracking information such as delivery tracking
  • Fully managing the inventory level
  • Faster processing

 

One of the crucial elements of managing dropship inventory is the process of syncing your supplier’s inventory data to your online store via a product data feed.

 

A product data feed can come in many formats, but it’s simpler to think of it as a spreadsheet, that provides the necessary product information you need to work with a dropship supplier.

 

Ok, so that’s what inventory management is, so let’s discover a little more about the benefits.

 

“One of the crucial elements of managing dropship inventory is the process of syncing

your supplier’s inventory data to your online store via a product data feed.”

 

Benefits of inventory management

Some of the crucial benefits of either instructing a dropshipping agent to fully manage your inventory and by using labor and time-saving software are:

Providing an efficient and fully automated process

With integrated API, you don’t need to work with processes such as FTP, excel or any manual workflows

 

API Is fast and helps you to completely avoid any manual mistakes.

 

Many of the best dropshipping agents such as HyperSKU are seamlessly integrated with Shopify and WooCommerce which enables even more streamlined processes such as order fulfilling, expert help with product selection, and much more to help you manage your inventory like a pro!

 

“API Is fast and helps you to completely avoid any manual mistakes.”

 

Faster processing

Faster processing is another major benefit when are looking for inventory management for your dropshipping store.

 

Generally, with some of the best dropshipping agencies and software, you will only be waiting a maximum of 1-3 days until you receive a tracking number after your customer places an order.

 

Using inventory management from a quality dropshipping supplier could see many aspects of your business speed up considerably such as:

 

  • Paying for orders
  • Buying products
  • Products arriving at the warehouse
  • Pick-and-pack
  • Sending out the product
  • Generating tracking numbers

 

If you also use stock inventory, you can even get a tracking number on the same day the order is placed.

 

Minimal cash flow

By automating your dropshipping processes. Such as inventory management, one of the undeniable truths is that it will help you keep your own money safe in your pocket, and save unit cost when buying in bulk.

 

Efficiency

In order to be able to reap the benefits of dropshipping rather than selling regular inventory held ‘in stock’, it’s crucial that dropshipping eCommerce stores such as Shopify and others maximize efficiency when it comes to handling inventory.

 

Depending on your niche, you may have chosen multiple suppliers in order to sell a range of product types and/or brands, which could cause costs to rise

 

If a customer makes an order for products that come from three different suppliers, you will have to pay three times the shipping cost, as you are unlikely to feasibly pass such a large shipping cost onto a customer who has the option of going elsewhere.

 

So by choosing to go with a trusted dropshipping supplier and inventory management, you will be able to mitigate those costs.

 

Visibility

Inventory visibility is a fundamental part of a successful dropshipping business.

 

The ability to satisfy your customer’s needs is crucially reliant on their purchases items being transported to them from a third-party, which could be a manufacturer or wholesaler.

 

It is vital that you are aware of how much stock your suppliers have available, so you can:

 

  • Let your customer know a realistic delivery time
  • Know when the product is shipped
  • Have information on where each order is
  • Be notified of any problems as soon as they occur.

 

Real-time inventory view

Another major advantage of Inventory management software and instructing an expert dropshipping company will allow you to view your entire inventory in real-time.

 

So now we’ve found out how to automate your inventory and either using software or a reliable dropshipping company to handle the business end of your orders, let’s find out whether it pays to hold your own stock.

 

Do I need to stock inventory when doing dropshipping?

Although It sounds contradictory for dropshippers to stock inventory, when compared with the whole idea of dropshipping which means you don’t have to hold stock as perhaps other kinds of eCommerce stores, it can be an extra arm to your business that has definite benefits.

 

When you are just starting out, one of the attractions of dropshipping for many is the lack of upfront costs you would get involved in when running a traditional type of store, either online or a brick-and-mortar kind.

 

However, once your business has built, let’s say, to 20 or more orders, to make sure you can fully service your customers and don’t have stock issues, it’s a winning practice to actively hold a certain level of stock.

 

By holding stock not only will you not get caught out if your customers order more product than your supplier has, but you will also quicken up the whole buying cycle, from order to delivery, and take advantage of lower unit costs by buying in bulk.

 

When your supplier tells you that a product is out of stock, there’s normally a process you might not be aware of going on.

 

Factories generally plan their daily production well in advance and of course, so unless you order in large quantities, it’s likely they won’t plan for your supply, as the bigger your order, the higher priority and lower price you will be ordered.

 

With a good dropshipping agent, you should be able to place an order for around 50 units which is the MOQ or minimum order quantity, and still be a priority customer, rather than on Alibaba for instance where the crucial level is 500 units for MOQ.

 

And to finish on…

We hope you’ve now got lots of good reasons to choose inventory management with a quality and reputable dropshipping supplier!

 

If your business is growing, we want to grow with you and help you to have an ECommerce store your customers will keep coming back to time after time, streamline the whole process with our friendly and knowledgeable staff.

 

Get started today and fully automate your store with your one-stop dropshipping agency!