In this age of Amazon orders and routine online shopping, opening the front door and seeing a package shouldn’t cause too much excitement—but it does! Getting a parcel delivered right to your doorstep, especially if it’s a gift, is still a surprisingly delightful experience.
Drop-ship fulfillment is where it all begins. Drop-shipping is a service whereby suppliers use a carrier to transport an individually boxed promo product or kitted gift directly to end users’ homes using an address list provided by the client through the distributor.
The distribution practice rose dramatically during the pandemic as a way for companies to deliver gifts to directly to remote workers or clients at their homes. Today, even with many employees having returned to their workplaces at least one or two days a week and in-person events back on the calendar, drop-shipping continues to be a service in high demand because of its ease, convenience and the personal touch it delivers—especially for holiday and year-end thank-you gifts for clients, employees and vendors. Drop-shipping can also be a profitable add-on service for distributors.
Dan Walls, logistics manager at supplier PowerStick, estimates that in 2021 approximately 25 percent of the company’s orders were drop-shipped. This year, he’s seeing only a slight decline in drop-shipping with an equal uptick in bulk shipments.
Some suppliers in the promotional products industry outsource drop-shipping to a third-party fulfillment company but PowerStick handles the process of producing the shipping labels, packing the boxes and shipping them out fully in-house using FedEx, UPS and USPS.
Along with the extra cost of drop-shipping, distributors should plan on allowing an additional five days once the final list of recipient addresses is sent to the supplier. Distributors can get a flat-rate shipping cost from PowerStick if they are using USPS; if they want to ship by FedEx or UPS, their sales rep can provide an estimate. The supplier uses all three carriers for drop-shipping in the U.S., but for recipients in Canada and internationally, it uses FedEx exclusively.
Drop-shipping involves three basic steps to transport a package from the factory to the recipient’s doorstep.
- The distributor must provide an Excel spreadsheet containing recipient information which is then carefully checked to make sure all the information has been entered in the correct columns.
- Next, the file is uploaded to the supplier’s shipping software, and any errors found by the system are corrected before printing the shipping labels.
- The boxes are prepared, packed, labeled and shipped.
The success of drop-shipping depends largely on the address list provided to the supplier, so the phrase, “garbage in, garbage out” definitely applies here. Drop-ship mistakes can be expensive to rectify. For example, if the spreadsheet the distributor provides contains errors and the recipient details are not verified, the package could be deemed “undeliverable” and will be returned to the shipper, not the owner of the account number. Another aspect to consider is that in some countries, such as Brazil, Argentina and India, it is virtually impossible to get a package cleared by customs. If it can’t be cleared within a short period of time, 2-3 days in the case of South America, it will be returned. The supplier charges it back to the distributor who, in turn, charges it back to the client. In many countries, the freight company will call ahead to the recipient saying they have a delivery and asking if the recipient will be home to accept it. Unfortunately, the recipient often believes the caller is from a utility company wanting to terminate service so they decline and, after three days, the package is returned to the shipper. All these transactions add up on the shipper’s account and the charges are invoiced back to the distributor and then to the client.
To streamline the process, and avoid costly and frustrating delivery errors and delays, distributors must be vigilant in preparing their Excel spreadsheet. These six tips will help:
- Verify that the recipients and addresses on the spreadsheet are correct and up-to-date.
- The spreadsheet should contain a separate column for each of these fields: Company Name, Recipient’s Name, Address Line 1, Address Line 2, City, State, Zip, Country, Recipient Phone and Recipient Email. Include first and last name together in a single column. Apartment or suite numbers should go in the Address Line 2 (if applicable), otherwise additional shipping charges will incur.
- Don’t mix quantities of products on a single spreadsheet. In other words, each name on the list should be receiving the exact same shipment. If some recipients are getting a different quantity of products, list them on a separate Excel spreadsheet.
- If shipments are going to recipients in both the U.S. and Canada, create a separate spreadsheet for each country. Recipients in other countries can be included on a single sheet.
- All state and country codes should be in a two-letter format.
- Send the spreadsheet to the supplier as early as possible to allow the necessary time to verify and correct any errors.
As with all business transactions, distributors who want to drop-ship should choose their supplier or fulfillment company wisely, and be aware of the extra challenges for shipments outside of North America. However, if the correct procedures are followed, drop-shipping can be a highly effective delivery method and a profitable part of their business.
PowerStick.com is the only company designing and manufacturing its own portable chargers in North America. See the full product line of personal tech products and premium packaging at www.powerstick.com.