Dropshipping is the new buzz in online selling, and everyone wants to step into dropshipping as it seems more convenient and straightforward. And many dropshippers are opting for vendors in China to source products. It allows them to run a dropshipping business from anywhere in the world through Chinese suppliers.
But have you ever wondered why online retailers choose dropshipping from China, thinking it’s the silver bullet for inventory management? They expect to avoid holding stock and to refill quickly as needed. Connecting to a vendor who sends products directly to the consumer saves you from the hassle and allows you to cater to your customer’s needs consistently.
But is it truly the path to success for dropshippers?
Without mastering inventory management with your suppliers in China, your dropshipping business might just face unexpected challenges.
Relying completely on your vendor without vetting them properly or overseeing inventory management can be the road to a disaster. Initially, you may be relieved that your supplier is doing everything for you, but you might encounter challenges due to a lack of vigilance. Thus, it is important to monitor your inventory and ensure the products never run out.
This article will explore why inventory management is essential and introduce the best practices to help you excel in dropshipping.
What is Inventory Management?
Before we dive into the details of inventory management in dropshipping and how you can master it, what exactly is inventory management?
Inventory refers to your products, and managing the inventory means keeping a check on your products and ensuring smooth functions. While you do not have to keep an inventory for yourself when the supplier ships directly to the customer, the shortage of products at the supplier’s end will impact your business. At the same time, managing the inventory is more crucial when keeping your stock in the warehouse.
Monitoring and managing the inventory enables you to stand out by ensuring you always have products in stock and your customers do not have to wait for manufacturing period besides long shipping. Thus, you can boost your business and scale it instead of worrying about delayed orders.
Importance of Inventory Management in Dropshipping
Inventory management is the spine of your dropshipping business, crucial for smooth operations and providing numerous advantages, such as preventing stock shortages, building customer trust, adapting to supplier inventory changes, and gaining a competitive edge.
You can provide seamless service to your customers, ensuring they come back to you instead of looking for other businesses that manage the orders more efficiently. But there’s more to it!
Here’s why inventory management is important in dropshipping:
- Keeping a close eye on inventory helps prevent stock shortages and improve customer satisfaction.
- Effective inventory management helps you stay informed on the stock and adapt to supplier inventory changes.
- It helps you avoid overstocking and under-stocking products by monitoring the inventory regularly.
- Streamlining the inventory allows you to ensure smooth and easy operation by reducing manual errors.
- Keeping the products stocked gives you a competitive edge over other sellers.
- Customers prefer you over others when you maintain a consistent supply and would reach out to you for quick orders.
How to Improve Dropshipping Inventory Management?
Though inventory management in dropshipping mainly depends on your vendor, you must keep a record for yourself, too. Whether dealing directly through the supplier or keeping stock in local warehouses, managing the inventory is inevitable for business success. Following a few practices can help you gain competitive edge in dropshipping through inventory management.
Here are some ways you can manage your dropshipping inventory better:
Finding Credible Suppliers
We’ve always emphasized the importance of searching thoroughly when finding a supplier. It’s because we understand that selecting a supplier not only ensures product quality but also helps smoothen the process. In case your supplier does not care about refilling the inventory before it runs out, you would not be able to deliver to your customers timely.
Working with suppliers who can rapidly restock your inventory is critical, especially when peak season hits, and everyone scrambles for stock while manufacturers struggle. So, always vet your supplier and pick those with a notable reputation.
Setting Inventory Minimum
Setting inventory minimums is a proactive strategy to avoid running out of stock. It’s like having a helpful alert system letting you know when your top-selling items run low.
It sets up an automatic rule that the supplier informs you when the inventory falls a certain threshold so you can mark the item out of stock in your store accordingly.
Talk to your suppliers and give them a minimum number of items to always keep in stock. You can find this quantity by monitoring that product’s demand and daily orders.
Automate your Inventory
Apart from managing the products manually, automation is vital to scaling your dropshipping business. Tools like Wefulfil allow you to automate mundane tasks, keep your inventory in sync, manage data accurately, and minimize manual errors – it’s about making your operations effortless and more effective.
Automating your inventory also allows you to concentrate on other aspects of business instead of worrying about inventory. So, opting for a tool takes away the hassle of managing products and inventory manually.
Imagine selling those super trendy rainbow-colored cups on Amazon. By setting an automated minimum limit, say 20 cups, you’ll receive a timely warning when there are only 21 left in stock. As a result, you can ensure you restock in time, leading to fast shipping, and boost customer trust.
Regularly Update Your Inventory Management Strategy
Regularly updating your inventory strategy is essential to meeting customer expectations and ensuring a seamless experience. It enables you to stay competitive and meet changing customer demands. Always analyze the data, including market trends, competitor research, and customer feedback, to implement changes in your inventory management strategy where needed. By maintaining a consistent supply, you can stay on top of the game and provide solutions to customers’ needs on time.
Prepare an Emergency Plan
Maya Angelou said, “Hope for the best and be prepared for the worst.”
And honestly, all businesses must abide by this. While you can always hope for the positive, you may not know when things go unexpected. We all remember what happened during Covid-19, right?
So, running a successful business requires you to be prepared for not-so-good times. To maintain an inventory at all times, it’s important to stay in the loop with industry trends, incoming orders, and national economic performance.
Alternatively, you can stay in touch with other vendors dealing with the same products and leverage their services during desperate times. It will allow you to maintain a steady supply even when the product is out of stock at your supplier’s end.
Final Words
Monitoring sales and inventory performance is a game-changer for effective dropship inventory management. When we track sales and inventory, we’re essentially tuning into customers’ purchasing preferences. For instance, imagine we notice a surge in sales of cozy blankets during winter – that’s our cue to take action. It lets us anticipate demand trends, like the need for warm items, letting us quickly restock or prioritize similar products.
Managing the inventory is a straightforward but critical part of dropshipping management. With inventory automating tools like Wefulfil, managing and maintaining the inventory has become even more accessible. You can enter the details, like the minimum order quantity, to ensure you never run out of stock.
Furthermore, develop trustful relationships with your vendors so they pay extra attention to your orders, ensure smooth order fulfillment, and always keep products in inventory. Finding the right vendor, automating your inventory management, and changing your strategy according to the situation are essential elements of dropshipping inventory management.
