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.