When Should You Automate your Drop Shipping Company?

Let me start by saying that drop shipping is not a passive business. You can’t just throw a few items on a website and never worry about or pay attention again. You must be involved if you want to succeed. Drop shipping requires less overhead and inventory expense since you won’t need a warehouse, but you pay for that lower upfront expense with higher long-term fees for services and higher merchandise charges.

A drop shipping business, and in fact, all other businesses should base their decisions about automation on financial reasons. When it becomes too expensive or time-consuming to continue to process orders by hand, you should explore the options available for automation.

Do a little test on your internal business expenses. Determine how long it actually takes to capture, process, and transmit a customer order to your supplier. Add how long it takes you to verify shipment has been made, tracking numbers received, and customer advised of details. How long does it take to handle all accounting functions for each order. Added all together, that will be your order processing time for each order you receive. Factor in other regularly repeating tasks you handle with every order. Multiply that time by the number of orders you handle each day times the hourly rate you pay your employees. That is what it costs you to handle each order. You probably will be surprised at how expensive it costs to handle orders. A lot of small businesses really underestimate how much it costs them to run a business.

Now, get the costs together on automation software and hardware necessary to process those same orders. Add your cost of human supervision of the operation. Add in your monthly service or maintenance fees to keep your system operational and you get the cost per order for automation.

These order costs don’t include your fixed expenses like rent, or equipment and utilities since they will be necessary whether you automate or not.

Always keep in mind that not all business process can be partially or fully automated. Some human intervention and oversight is always necessary.

You can automate the order processing system to send orders directly to your supplier after your system captures the customer data. Of course, you must make sure someone audits this process so correct data is captured and transmitted.

You can automate the process to send your customers tracking data and shipping advice. This could include your accounting entries so orders are properly processed, shipped, and marked when completed. You can’t just send your drop ship supplier 100 orders and rely on them shipping 100 orders on time, complete, and correctly. Your internal data needs to be matched and edited with the external data they send you.

You can automate customer contact to thank your customer for their order and give them options on how to contact you. You can automate future contact to advise about new items and promotions by utilizing an email auto responder for mailing lists.

You can automate some customer service tasks by offering a really great and comprehensive FAQ service but you still need human intervention. Some people are just funny that way! Imagine, wanting to actually speak with a live, real-time person that can actually answer questions and make decisions.

Of course, no matter how much automation you can apply and how easy you can capture and store customer data, it is still all worthless unless someone, generally a human, actually takes the time to analyze and use all that data.

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