STiR coffee and tea magazine

56 STiR coffee and tea / Issue 4, 2021 (August / September) Dropshipping: lower capital, lower overhead, ease of setup. photo credit Mohamed Hassan on Pixabay capital, reversing the standard wholesaler process, where the seller pays for the goods it stocks and markets and recovers its costs when customers purchases them. With dropshipping, the customer pays and only then does the retailer incur the costs of product and fulfilment. Here's a quick list of the other main advantages, many of which have hidden nega- tives. Most analysts and experienced tea sellers are iffy and even negative about drop- shipping: • Lower capital and low overhead in managing storage space and ensuring fresh- ness and quality control. Providers stress that, for instance, you – anyone – can run your business from anywhere, even as a home-based operation that requires just a lap- top. If you can do so, so can many amateurs who buy the same products from the same dropshippers, often at lower prices. That puts pressures on tea firms aiming to build and grow a "real" business. They may have better quality but show up in customer search comparisons as expensive in comparison. eBay includes dropshipping but how does a retailer stand out among the cheaper offers? • Clients can offer a wider and widening range of products, test new ones without risk and quickly handle unanticipated shifts in demand. But the more they add, the more complex and cost in keeping track and managing relationships becomes. Most analysts highlight loss of margin as a consistent downside to drop shipping. The retailer remains responsible to the customer for returns, delivery blips and overall sat- isfaction. If one places an order for, say, three items that are provided by separate sup- pliers, that's three shipping charges, for the retailer, which cannot be passed on to the buyer. If there is a supplier error, such as damaged packaging or missing items, it's the retailer the customer contacts and expects it will resolve. • Ease of setup and getting started in selling. Dropshipper plans cost as little as $100 to get started. The software is simple and Internet "influencers" use it to make money from their recommendations for, say, detox, weight loss or wellness teas. Many of these have basic Web sites and little if any customer service. But they can intensify competition and price-cutting. • Amazon, Shopify, AliExpress, and eBay are among the many giants that offer it as a major part of their operations open up exposure and marketing op- portunities to a huge range of potential customers. However, they generally do not permit a contracted client to purchase items from other online sellers and have them delivered directly to the customer. ("Fulfilled by Amazon" that accompanies a product description means dropshipped by Amazon.) There any many warnings in reviews of the constraints on product and supplier control, branding, discounts and inclusion of samples, literature and offers in the package the customer receives. Overall, the consensus among expert analysts and case studies is that dropship- ping is best for small and start up casual sellers and scales poorly, but that may be too narrow a perspective. Many of the negatives reflect amateurism – the home- based dropshipping doesn't require much effort or management. The main shift for success is that marketing and customer relationship building are even more vital, as they should be. There are many signals that FBA or the Shopify-Oberlo-AliEx- press and leading wholesalers are creating dropshipping platforms that exploit their technology, operational excellence, and relationship building skills to raise full service standards to a new high. Drop- shipping is not a business type but a ful- filment method. Coming back to the issues of planning when you can't predict, the best whole- sale-dropper services reduce uncertainty and risk for retailers. They add flexibil- ity and a host of extras that may include label printing, private labeling, up to the minute information on product demand, and alerts to shortages. They can special- ize and ensure that only the best suppliers are included in their service reach. The core issue is getting the inventory right, with dropshipping digital inventory. The competitive game has changed from selling tea to managing the selling to max- imize the customer experience. There is no barriers to entry in sourcing almost all teas. Using Amazon as a convenient met- ric; it lists over a thousand matchas, sev- eral hundred Wuyi oolongs and Vietnam teas and six hundred Earl Grey loose leaf teas. These range from the excellent to the mediocre and are hard to differenti- ate. Nepalese teas remain hard to locate in tea stores, but buyers have around a 150 on Amazon. Tea sellers can't afford to be under- or overstocked. They need to make an in-depth assessment of the capabilities of their current suppliers, many of which are traditional wholesalers and of their adapt- ability to all the supply challenges of this competitive, turbulent, and disruptive en- vironment. This brief review does not endorse specific companies, but here are a few worth browsing, both to help retailers and growth-focused online sellers get a sense of the options, stimulate ideas, and rate their current sourcing and the trends they can exploit: Empire Tea, Green- DropShip, Alibaba/AliExpress, Shopify, Amazon FBA, and Mark T. Wendell.

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