Ecommerce Encyclopedia

‟Ecommerce is a powerful means to connect the unconnected to global trade” - Arancha Gonzalez

How to maximize warehousing and inventory management

While the worldwide retail losses due to overstocks is estimated to be around $472B annually, dropshipping could help reduce losses by maintaining no stock and fulfilling orders from factories, or warehouses of wholesalers. However, warehousing management could be a difficult task when it comes to running a dropshipping business because not only would you have to make sure that your supplies have enough item quantity in stock but you would also have to ensure your customers’ satisfaction.
Therefore, in order to make your dropshipping business a success, it is crucial for you to utilize your inventory and warehouse management processes.

1. Keep in mind that there are certain products that are more suitable for dropshipping 

Books, CDs and DVDs, furniture, electronics, auto-parts are known to be sold well on eCommerce platforms while other categories of product such as apparel lack such potential.

Therefore, it is essential for your plans to concentrate on your warehouse and inventory in order to forecast how dropshipping each type of product might affect your profit.

2. Is it advisable to combine inventories?

There are several answers to this question:

First, some businesses opt for complete separation of their wholesale and dropshipping inventories and operations. Some entrepreneurs might even have a separate process of manufacturing for each kind of inventory, or their dropshipping items will be handled by a 3PL.

By separating each individual inventory, businesses are allowed to keep the more complicated dropshipping out of their wholesale processes. This also saves them from the risk of failure to fulfill a wholesale order due to dropshipping affecting their wholesale pallets and stock.

Meanwhile, some other businesses combine their wholesale and dropship warehouse so that they could simplify their warehousing management as well as reduce costs by means of having the same teams and systems for both the process of wholesale and pick, pack, and ship.

Last but not least, another option that companies could also opt for is combining both strategies; in which both the dropshipping and wholesale inventory should be kept separated but flexible in order to fulfill orders.

Still, in conclusion, you should mainly focus on the current circumstance of your business such as sales concentration, total dropshipping order volume, operating margins, warehousing management, and other various costs.