From Order to Delivery: Smart Approaches to Dropshipping Control
When Wayfair first launched its drop-shipping model in 2002, many industry sceptics doubted the viability of selling furniture without maintaining physical inventory. Fast forward to today, and the company generates billions in revenue annually, proving that successful drop-shipping isn’t just possible, it’s potentially very profitable. However, the path to such success requires mastering a unique set of challenges. The company’s journey from startup to e-commerce giant demonstrates that with the right systems in place, drop-shipping can scale dramatically while maintaining customer satisfaction and operational efficiency.
The Hidden Complexity of “Hands-Off” Inventory
The promise of drop-shipping sounds almost too good to be true: sell products without ever touching them. Yet, as fashion retailer ASOS discovered during their 2019 inventory crisis, lack of real-time visibility across suppliers can lead to catastrophic stockouts and overselling. The company lost millions in potential sales and faced significant customer backlash when they couldn’t fulfil orders during their peak season. This crisis served as a wake-up call for the entire industry, highlighting the critical importance of maintaining precise inventory control even in a drop-shipping model. The incident also demonstrated how quickly customer trust can erode when inventory management fails, making it clear that “hands-off” doesn’t mean “hands-free.”
Achieving Real-Time Inventory Mastery
The key to avoiding such disasters lies in maintaining perfect visibility across your supply chain. Consider how Dollar Shave Club revolutionized the men’s grooming industry through drop-shipping. Their success wasn’t just about clever marketing, it was built on robust inventory synchronization with suppliers. Their ability to scale from zero to acquisition by Unilever for $1 billion in just five years was largely due to their mastery of inventory management and supplier relationships.
Modern solutions like Cin7’s EDI integration and core workflows enabled to identify and automate workflow functionalities make this level of coordination possible for businesses of any size. When a customer orders from your store, the system automatically checks if the product is set up with a Dropshipment requirement. If so, it would place an order to your supplier with your customer’s delivery details for shipment and your business details for billing purposes. This workflow identifies there is no delivery to you from your supplier and you are not going to ship anything directly to the customer. Therefore, the system disables the receipting and shipping functions to avoid confusion and possible errors. Since the purchase orders are created in real–time per customer order, possibilities of missing orders and stock run–out issues are minimised.
Quality Control from Afar
Gymshark, now a billion-dollar fitness apparel brand, started as a drop-shipping operation but faced early challenges with product quality inconsistencies. Their solution? Implementing rigorous supplier performance monitoring and establishing clear quality benchmarks. Their transformation from a small drop-shipping operation to a global brand worth over $1.3 billion showcases the importance of maintaining strict quality control standards even when you don’t physically handle the products.
Today, tools like BC Insights in congruence with Cin7 allow you to track key supplier performance indicators such as:
- Order fulfilment rates
- Return percentages
- Delivery time consistency
- Product quality ratings
When one of your suppliers starts showing signs of decline, you can quickly switch to backup suppliers through automated systems, maintaining business continuity without disrupting customer service. This ability to pivot quickly between suppliers has become increasingly important in an era where supply chain disruptions can happen at any moment, as demonstrated during the global pandemic when many drop-shippers were able to maintain operations by quickly switching to alternative suppliers.
The Shipping and Customer Experience Connection
Zappos built its empire on exceptional customer service, even with a drop-shipping model. Their secret? Transparent communication and efficient shipping management. Using integrated shipping systems, they could provide accurate delivery estimates and proactive updates about potential delays. Their commitment to customer service, even with a drop-shipping model, led to their $1.2 billion acquisition by Amazon and set new standards for e-commerce customer experience.
Modern e-commerce businesses can achieve similar results using Cin7’s shipping integrations, which automatically calculate delivery times based on real warehouse locations and carrier capabilities. When delays occur, automated communication systems keep customers informed, maintaining trust and reducing support inquiries. This level of automation and transparency has become particularly crucial in the post-pandemic era, where customers expect real-time updates and clear communication about their orders.
Forecasting: The Power of Predictive Analytics
Consider the cautionary tale of Toys “R” Us, which struggled with inventory forecasting during their final years. In contrast, successful drop-shippers use advanced analytics to predict demand patterns and optimize inventory levels. The difference in outcomes shows how critical accurate forecasting is in modern retail, regardless of your inventory model.
Cin7’s demand forecasting tools help you:
- Analyse seasonal trends
- Predict upcoming spikes in demand
- Optimize reorder points
- Track profit margins in real-time
- Monitor supplier costs and performance
These capabilities have become even more crucial in today’s volatile market, where consumer behaviour can shift rapidly and supply chain disruptions can occur without warning. The ability to adapt quickly to changing market conditions has become a key differentiator between successful and struggling drop-shipping operations.
The Path Forward
Success in drop-shipping isn’t about eliminating inventory management; it’s about mastering virtual inventory control. Companies like Wayfair, Dollar Shave Club, and Gymshark have shown that with the right systems and strategies, drop-shipping can scale dramatically.
Remember: your ability to control inventory you never touch depends entirely on the systems you put in place. By leveraging modern inventory management solutions like Cin7, you can build a drop-shipping operation that’s both profitable and sustainable.
The future of drop-shipping belongs to businesses that can maintain perfect inventory visibility, ensure consistent quality, and deliver exceptional customer experiences, all without ever touching their stock. If you’re feeling stuck and need some help employing the right tools and strategies for your business, book a free consultation with one of our inventory experts today.
References
Cosgrove, E. (2019). Warehouse tech glitches cause $25M disruption for Asos. [online] Supply Chain Dive. Available at: https://www.supplychaindive.com/news/asos-warehouse-technology-glitch-millions/559211/.
Foley, H. (2023). The Official Gymshark Story. [online] Gymshark. Available at: https://au.gymshark.com/blog/article/the-official-gymshark-story.
meghalaroia (2022). The Story Behind Wayfair Success | Velocity. [online] Blog. Available at: https://blog.velocity.in/the-secret-sauce-to-wayfairs-success-velocity/.
Waldron, J. (n.d.). How Zappos Wins at Customer Service Every Day. [online] eTail Palm Springs 2022. Available at: https://etailwest.wbresearch.com/blog/how-zappos-wins-at-customer-service-every-day.
quickbooks.intuit.com. (2016). Toys‘R’Us: How out-of-stock situations are killing the toy giant. [online] Available at: https://quickbooks.intuit.com/r/inventory/toys-r-us-how-out-of-stock-situations-are-killing-the-toy-giant/.