Drop Shipping Tip: Minimizing Back Orders

When using drop shippers, you lose some of the control over your inventory level, leaving it in the hands of your supplier. This increases the potential that a back-order situation may occur without your knowing about it.

The truth is, that there isn’t a way to guarantee that a product will be in stock. This is a simple fact of the drop shipping business. It’s a trade off, but one that is well worth the benefits. Once you’ve learned how to reduce the possibility of a back-order the benefits of drop shipping can become even greater. Here are some of the top tips for minimizing back-orders with your drop shipping business.

Monitor Quantities on Hand (QOH)

The most obvious thing you can do to protect yourself from back-orders is to closely monitor the quantities in stock from your drop shipper. Doba provides a data export tool that can help you monitor supplier inventories. If you are able, monitor quantity trends before listing an item in an auction.

If selling items at a online auction such as Ebay, you’ll typically want to only list products that have a large number of items in stock. However, if you have monitored quantities before hand and notice a product isn’t “flying off the shelves”, you may be comfortable selling items that have a lower number of products in stock.

Run Shorter Auctions

I listed an item on eBay® that had only three of the product left in stock. Even though I knew the product to be a slow moving product, listing something with a quantity of just three had me a little worried about it.

As such, I decided to run a three day auction. The faster the auction got over with, the sooner I could drop ship the item to my customer, and the less I would have to worry about it. I wasn’t concerned about losing potential business from having a shorter auction because listings typically get the most views and bids in the last 24 hours most often.

Cancel your Auction if the QOH Reaches Zero

Along with monitoring QOH’s before listing an product, you’ll want to continue monitoring the quantities throughout the auction. If you notice quantities dropping down each day, you’ll want to keep an even closer eye on the product quantities.

You can’t drop ship a product that isn’t in stock. If the quantity ever reaches zero, go to your auction right away and end the auction early.

Drop Ship an Item to Yourself to “Pad” your Inventory

Shipping a few items to yourself to pad your inventory is perhaps the most effective fail-safe way to prevent back-orders from having a negative impact on your business. This is particularly advisable for items that are regular fast sellers for your business.

Usually, you’ll only need to keep one or two products in your personal inventory, even if you typically have several auctions with the same product running simultaneously.

If an product runs out of stock, you’ll always have the one or two products on hand that you can ship out to you customer and still have time to go through your other auctions to end them early until the product is back in stock.

eBay and Drop shipping – Getting the Product to Your Customer

If you hope to own an eBay business, and make a full time living at it, you can easily make that dream
come true – even if you don’t have a product of your own to sell. eBay provides many people who want
to quit their corporate nine-to-five jobs with a way to make a good living, without having to put up a lot
of start up capital. This is made possible with the help of drop shippers. Drop shippers send merchandise
to the customers of business owners. If you have an eBay business, you are a business owner. This will
allow you to offer a wide variety of stock in your eBay store, without having the need to warehouse
all of those products!

All you have to do is set up your auction, and sell the product. You then pass the customer’s
information on to the drop shipping company. The drop shipper does the rest, and they will even use
your company information, as well as your company logo if you have provided it to them. When the
product arrives at your customer’s home, they will have no idea that your company didn’t send it.
The drop shipper will package, label, and ship the products that you sell, allowing you more time to
set up even more auctions, for greater profits.

You must establish a relationship with several drop shipping companies in order to become successful.
In the beginning, most companies will require you to pay for the items that your customers order before
they are shipped. You need to fill orders in a timely manner, so you should pay for the items with
a credit card for speedy service. Eventually, you will be able to have the drop shipper fill your orders,
and then bill you for them later.

When you set up your eBay auctions, make sure that your reserve price is set higher than the price
that the drop shipper will be charging you for the item. The idea, of course, is to earn a profit!
Depending on the item you are selling, a markup of about 10% should be about right, but you should
do some research to see if the item is selling for a lower price in another eBay auction, or through
other online sources.

By starting an eBay business using the drop shipping method, there is essentially no financial risk
involved. The product will be sold before you pay the drop shipper for the item. This is one of the few
businesses where you can actually turn a profit before you have expenditures!