How can DropShipping help with the current supply chain issues?
It hardly seems like a day goes past at the moment where there is bad news about the issues that are plaguing the supply chain, and there doesn’t seem to be much in the way of an end in sight. And although the problems with the supply chain continue, customer demand hasn’t decreased – in fact, it is quite the opposite and customers are relying on eCommerce ever more.
It is really worrying for businesses that rely on the golden quarter to maximise their profits for the year, since they don’t know if the products that they are counting on to make those profits are going to arrive on the right side of Christmas. And with experts predicting that this year will further break the records for online sales, that’s a huge problem.
For businesses that depend on regular sales of products that customers need month in, month out, the issues with the supply chain are just as problematic. If regular customers can’t get what they need, they’ll go elsewhere, and we don’t need to spell out just how damaging losing those repeat customers can be, even for one month – especially if they don’t return.
Most of us in the industry are aware of where many of the issues with the supply chain stem from at the moment, and how easy it is to cause problems. The fragility of the worldwide supply chain was dramatically demonstrated in March when the Suez Canal was blocked by the Ever Given, but before and since then, we’ve seen:
- The COVID-19 pandemic continuing to cause issues across the board
- Delays in the manufacturing process due to delivery of materials and staff shortages due to COVID
- Empty shipping containers not being returned – creating the knock-on shortages for sending products
- Ships being sent out at full capacity meaning no additional space for extra stock to be sent
- Delays at ports worldwide – both outgoing and incoming – due to COVID cases, congestion and strikes
- Costs of shipping increasing because of the above issues, and increases in fuel prices
- In the UK, the ongoing impact of Brexit, such as customs charges and delays at the border
- Within the UK, the shortage of HGV drivers
Even when products get to the UK, the supply chain issues are still problematic. Shortages of lorry drivers aren’t just impacting products getting to the UK, they’re also causing delays with products getting to distribution centres, out to retailers, and for couriers getting deliveries out to their final destinations.
How are customers reacting to supply chain issues?
Given that customers have come to depend on next day deliveries thanks to Amazon Prime, all these potential delays have huge implications for retailers. Customers don’t always consider that the retailer they bought from is being affected by all these issues, and so when they vent their frustration about slow delivery on their reviews, that can be really damaging – and yet the retailers have little control over these issues.
As of October, we’re seeing that customers are already shopping to ensure that they get everything that they want for the festive season. This is evidenced by Amazon changing their tactics for Black Friday – they’re promoting Black Friday already, and are expected to keep those deals going for another two months, allowing customers much more surety that they will get their products.
When will the supply issues be resolved?
Unfortunately, it really isn’t looking like there will be a resolution any time soon. Many experts – including those at IKEA, which is leasing more ships, buying containers, and re-routing goods between warehouses to help alleviate the issue for their customers – think it will be well into 2022 before the situation gets to any kind of ‘normal’.
And that isn’t just in the UK either – the US is encountering similar issues, with backlogs at ports reaching an all-time high. Getting the shipping containers to where they need to be, and dealing with the incredible backlog means that it really is going to be some time before we will see the kind of efficiency prior to the pandemic.
How can retailers work around the supply chain issues?
This is a question that many retailers are asking themselves right now. Some major retailers, such as John Lewis are chartering ships to ensure they have the stock that consumers want for the Christmas period, while others are building their own delivery fleet in-country to control their deliveries throughout the UK. But those options aren’t possible for most businesses, and certainly not this close to Christmas.
But if you don’t have the products your customers want, you can’t sell them – and given the precariousness of the supply chain, you can’t bank on your deliveries coming in on time. That means you can’t take pre-orders, since you can’t guarantee the date you’ll be able to deliver by – and as you know, taking orders and then needing to cancel them can be enormously damaging for your business. Negative feedback on social media and review websites can deter other customers from buying from you – and cancelling orders on marketplaces can lead to your account being penalised or suspended.
The most effective solution for sourcing inventory and securing your profits for quarter four is DropShipping from suppliers that already have stock in the country. Many retailers that hold their own stock have shunned the DropShipping model, since if you have the resources available to buy in bulk, and make bigger profits, then it makes more sense to operate that way. But with the current challenges in the supply chain, wholesalers and suppliers may not have the stock to sell you – and they may be operating more cautiously too.
How does DropShipping work?
Essentially, it is a retail fulfilment method where, as customers place orders from retailers, the retailer purchases the items from suppliers. They provide the customer’s delivery details to the supplier with the purchase, and then the supplier does the rest – picking, packing, and dispatching directly to the customer. The retailer is completely hands-off, and never sees the item, while the customer doesn’t know (or care, probably!) that the item didn’t come from the retailer’s warehouse.
Retailers make a smaller amount of profit on each DropShipped sale, but DropShipping has many advantages – particularly if you’re DropShipping using a platform like Avasam.
Advantages of DropShipping with Avasam
In the past, DropShipping from multiple suppliers would generally mean you’d need a developer to ensure that you got the connections you needed to work with, and errors were common – which meant many retailers simply wouldn’t risk it. With Avasam automation, none of that applies, and there are significantly more advantages for retailers too.
- You can start and stop selling products as demand changes
- No risk of dead stock in your warehouse – perfect for seasonal products, or untested lines
- There is no upfront investment in stock required – you only pay for what you sell
- You can work with an unlimited number of UK-based suppliers
- Diversifying your inventory means you can reach more customers
- There are integrations with major sales channels, shipping providers and commerce systems such as Linnworks
- API information is available to create other connections
Suppliers benefit from working this way too, since they can sell more items, and can work with more retailers than they would be able to when selling in bulk. They can also offer special offers to help clear stock, and as long as they have the capacity to process the orders efficiently, DropShipping presents significant opportunities for suppliers to increase their sales, without needing to invest in marketing.
How does DropShipping help with the current supply chain issues?
For retailers, DropShipping can help alleviate the stress associated with the current supply chain issues – when you’re working with suppliers that already have stock in the country. You’ll be able to sell more items, from more suppliers, and although the margin on each sale will be slightly smaller than you’d make if you’d bought wholesale, you’ll be able to fulfil customer orders, which will keep them happy. This will lead to far more secure profits than you might be able to achieve if you’re relying on buying stock in bulk, and will help to ensure the success of your business in the year ahead.
How DropShipping from SaleYee, through Avasam can help
If you know anything about DropShipping, you’ll know that there are a lot of businesses that rely on DropShipping from China – because it is possible to make better profits as prices are typically lower. However, with the current supply chain problems and issues with logistics, the issues that are often cited as reasons to not DropShip from China are compounded.
Our newest partnership with SaleYee allows businesses to leverage the benefits of DropShipping from China, without the challenges that DropShipping from suppliers that are based in China typically present. SaleYee is a Chinese wholesaler that has a distribution network with 16 locations across the UK, which means you can source and sell from multiple product categories. You’ll get the great pricing that you’d expect from Chinese suppliers, and because the products are already in the country, there are none of the delays that occur when shipping from overseas at present.
DropShipping from UK suppliers isn’t the answer to the significant numbers of problems with the supply chain at present, but it will certainly help protect your business from many of the issues. You’ll know that the products are in the country already, and you’ll be able to keep those products flowing in during the busy quarter four period.
Getting started DropShipping from SaleYee, and all of our other UK-based suppliers, is easy. You can sign up for your free Avasam trial account, and start sourcing from the extensive catalogue from all of our suppliers – and once you’ve set up your integrations, you can start making sales immediately. Should you need help with getting set up, or integrating with an existing system, book a call with a member of the team – we’re happy to help you get started.