How to develop your B2B business using dropshipping
Dropshipping has grown hugely in popularity in recent years, with more and more SMBs and entrepreneurs adopting this supply strategy. Though usually associated with B2C e-commerce, dropshipping is also a great way to manage B2B sales in a range of industries. What does dropshipping entail? How does B2B dropshipping work? What are the advantages and drawbacks you need to know about before getting started?
What is dropshipping?
Here is a quick overview of what dropshipping aims to do and how it works.
The growing interest in dropshipping for business over the past few years is largely down to the fact that this new way of managing flow offers logistical advantages. In practice, dropshipping works like direct shipment, but without the need for a distribution center. A business can use this sales process to sell a product without having it in stock. As soon as a customer orders a product, the information is sent to the supplier, who takes care of shipping the item directly. This supply method therefore reduces the various superfluous intermediary stages of the supply chain to maximize efficiency and minimize costs and lead times.
That being said, dropshipping is not to be confused with pure online sales with specialized suppliers whose business is dedicated to e-commerce. The idea of B2B dropshipping is to provide direct shipment to points of sale to complement your main, traditional distribution model.
Explaining B2B dropshipping with a concrete example
- Seasonal products that need to be shipped to customers on time. This means any products relating to a particular season or festive period. For example, Christmas decorations, summer clothes, garden furniture, or Easter chocolate. Direct shipment also means you can process more orders during busy periods without investing in logistics that will go unused the rest of the year.
- On-trend items that will only be of value for a limited time and which therefore require a more flexible, responsive flow.
- Expensive or large items (like machines for example) for which direct shipping could reduce storage and transport costs.
- Products with a fast turnover for which demand is high and constant (food, drink, hygiene products, etc.).
- Direct shipment can also be used for out-of-stock products to restock the market more quickly.
Let’s take the example of a business specialized in DIY and gardening supplies. After segmenting their products (plants, hardware, tools, groceries, etc.), the business can choose dropshipping for certain segments such as groceries, which, because of expiration dates, have a fast turnaround and do not constitute the company’s main line of business. Each time an order is placed, the supplier will ship to the customer directly, meaning the business does not need any inventory.
How do to get started with dropshipping?
What are the pros and cons of dropshipping?
- By outsourcing inventory management, businesses can reduce storage, handling, and administrative costs.
- Businesses can also lower their financial risk, particularly regarding damaged products.
- The absence of logistics also means a reduction in shipping times (as long as flows are properly managed, and the supplier network is reliable).
- Businesses can sell a wider range of products compared to a traditional distribution method.
- Businesses become dependent on their suppliers to fulfill customer orders on time - which is why trust is so important in the relationship with the supplier.
- Businesses relinquish all control over terms and conditions for sending products - this is entirely delegated to the supplier.
- Businesses may encounter difficulties with centralizing sales and tracking customer orders.
Why use specialized software?
Using specialized software that lets you combine dropshipping with wholesale sales management means you can enjoy all the benefits of dropshipping without having to worry about practical or technical concerns. With software like Erplain, you can diversify your business by combining different distribution strategies. The main advantage of this kind of software is that it simplifies your inventory and customer order management. You always have control and visibility across the whole of your business.