small business

Blind Drop Shipping Presents a Unique Opportunity for Those Wanting to Start a Stockless business.                                        

Unless you have been living on the moon for the past century, then you are familiar with pop music icon Elvis Presley. He was the “king” of rock and roll. He was also known for eating such wonderful dishes, such as bacon-wrapped meatballs and fried peanut butter banana sandwiches. You can probably feel your arteries start to clog just thinking about such a dietary fiasco. Ugh! Elvis was also the king of parcels and shipping. You might be asking yourself, “How can that be?” Here is how…Elvis Presley once sang a song called “Return to Sender” which was a huge hit. As a result, the “Return to Sender” postage label became one of the most widely recognized postal routing terms of all time. In short, the song playfully describes the idea of re-routing a letter and sending it back to its originator.

In the song, Elvis was the originator (or sender) of the letter. In the world of wholesale and drop shipping, the originator is not always known.

The concept of drop shipping is not new, but has found itself in the midst of a growth curve fueled by Internet commerce. As a quick review, drop shipping is a process used by a manufacturer, or authorized wholesale distributor, to ship your single item orders directly to your customers. As a retailer, you will put the product pictures on your site at retail pricing and wait for an order. Once you receive an order, you will email or call the drop ship supplier with the customer’s order information, and the drop ship supplier will in turn ship the product directly to your customer. It is not just for small businesses. In fact, many larger catalog distributors make value-adding use of drop shipping.  

Defining Blind Drop Shipping

If you are not familiar with the terms blind drop shipping, blind shipping, or private label shipping, then you are about to learn an important business secret that many online businesses leverage today. Blind drop shipping is having merchandise shipped from a wholesale supplier with the retailer’s return address marked on the package. By having the retailer’s return address on the package, the product supplier information is kept confidential to the retailer. In other words, blind drop shipping helps a retailer protect their product source. Sometimes the package being sent, might not have an actual name on the return address. This is often referred to as “blind shipping” as the sender’s return address is displayed without a name. The package contents are another component that qualifies a drop shipment. In a blind drop shipment, the package must not contain any literature related to the wholesale supplier. Advertisements, business cards, or logos are not allowed on the package. Again, this is to protect the retailer from revealing the wholesaler’s information. If you are thinking about using drop shipping to support your online stockless retail business, there are some important factors to consider in logistics:  

Tracking

It seems like nowadays most customers want to get parcel tracking information about the products they order. To not offer parcel tracking information, is sometimes a strike against you as an online retailer. If you are a new retailer, are an eBayer, or are thinking about doing online retailing, do not worry about this tidbit. There continues to be many businesses that do not offer tracking services, and for good reasons. Ultimately, you will have a customer who will ask for tracking information. If you give the tracking information, it will have your supplier’s address information on it.

What will you do if you are using a blind drop shipper for the order? Without a doubt, this is a short coming to using blind drop shipping. There are two paths to go with this scenario. The first one would be to give the tracking information, thus letting the customer know the identity of the supplier. If it is a no-repeat customer, this might work in your favor. The second option is to implement a policy of not giving out tracking information. It simplifies things and sets boundaries with your customers. There is one other option worth mentioning. It involves a slight risk, but the reward can be big. Some retailers who use blind drop shipping in sub-wholeselling, and offer the tracking information, will describe the shipping origin differently when asked. They might describe the shipping origin as their “remote warehouse” or “distribution center” reserved for returns. In some respects, this is true, but it does not tell the entire story.

The risk is having the sub-wholeseller find out the original shipping origin is not the original company they were assuming. They might not like having someone else in the middle (i.e. a middleman). In some cases, the sub-wholeseller might not care if someone is in the middle as there might be a good relationship occurring. They may feel the slight loss in margin is acceptable as someone else is doing the work to manage the wholesale drop shipper. In general, most retail customers do not care where the product is coming from, or where it is being returned. They are mostly concerned about getting the product as soon as possible for the lowest cost.  

Handling Returns

What happens when you get a customer who wants to return something for an exchange? If your policy is to not give out tracking information, then as far as the customer knows, the package came from your location. Unlike a return address, the main label address will need a valid recipient name when the customer sends the package back for exchange. In short, if you want to keep your supplier concealed, then you will need to have the packaged returned back to your location. Later on, you can return this back to your supplier. In this scenario, you will have paid twice for shipping, but it keeps your wholesale source concealed. 

Consider This…

In summary, blind drop shipping presents a unique opportunity for those wanting to start a stockless online retail business. As with any supply chain, there are advantages and pitfalls to operating with such a product sourcing method. If you are short on cash, in need of product, and have started on online business, blind drop shipping should be something to consider. HBM 

Brad Beiermann Ph.D. is President of Hienote Inc. Dr. Beiermann is one of the leading experts in business technology and e-commerce. Hienote Inc. specializes in product sourcing, exhibition marketing, and assisting small businesses locate wholesale drop shipping companies. You can visit their site at http://www.hienotedirectory.com. Get a FREE copy of the exciting e-book that is taking the internet world by storm, "Starting Your Online Retail Niche With Drop Shipping" Just go here: http://www.hienotedirectory.com/drop_shipping_ebook.htm to grab your copy today...it's FREE!

Things You Want To Clarify With Drop Ship Suppliers 

What is the process for placing an order to be drop shipped?

What is the process for confirming that the order was shipped? 

What is the process for handling and replacing products damaged in shipping, and for products that are defective? 

What is the process for handling incomplete orders or an out of stock product?

What is the process if the wrong product is shipped to a customer?

What are the full shipping costs, and how they are determined?

How quickly are the orders shipped, and by what means are they shipped: UPS, USPS, FedEx or Freight? 

Are there options for standard and expedited delivery?

Are there photos and descriptions available to use for products? In what format can they be provided? (i.e. the preferred electronic, or printed) 

Is there a way to know the inventory status of a product?

What is the restocking fee, if any, for products that are returned by the customer for reasons other than damaged or defective goods? This can be between 10-20% of the cost of the product. HBM 

John Schulte, National Mail Order Association (NMOA), http://www.nmoa.org 

When to Carry Your Own Inventory

Doing business using drop shipping arrangements are suitable for people getting started, or with products that are large and have special shipping needs (like furniture), or are very expensive. As your business increases and you develop a sense of what sells well, you can begin to stock limited supplies of certain fast selling items, and continue utilizing drop shipments for slower selling products, expensive ones, or ones with special shipping needs.

Eventually, as your business grows, you can carry an inventory of everything you sell. Stocking products can be advantageous down the road for the following reasons: All products can be shipped to your customer together, thus cutting down your shipping expenses; and customers will also receive all their products at one time. HBM 

John Schulte, National Mail Order Association (NMOA), http://www.nmoa.org