When drop shipping, you lose some control over inventory levels, leaving it in the hands of your supplier. This increases the potential that a backorder situation can occur without your knowledge.
The truth is, there is no way to guarantee that an item will be in stock. This is a simple fact of drop shipping. It is a trade off, but one that we think is well worth the benefits. Once you've learned how to reduce the possibility of a backorder the benefits of drop shipping become even greater. Here are some top tips for minimizing backorders with your drop ship business.
Monitor Quantities on Hand (QOH)
The most obvious thing you can do to protect yourself from backorders is to closely monitor quantities. Doba provides a data export tool that can help you monitor supplier inventories. If you are able, monitor quantity trends before listing an item in an auction.
If selling items at an online auction, you'll typically want to only list items that have a large number of items in stock. However, if you have monitored quantities before hand and notice a product isn't "flying off the shelves", you may be comfortable selling items that have a lower number of items in stock.
Run Shorter Auctions
I once listed an item on eBay® that had only one item left in stock. Even though I knew the item to be a slow moving item, listing something with a quantity of just one had me a little worried.
As such, I decided to run a three day auction. The faster the auction got over with, the sooner I could drop ship the item to my customer, and the less I would have to worry about it. I wasn't concerned about losing potential business from having a shorter auction because listings typically get the most views and bids in the last 24 hours anyway.
Cancel the Auction if the QOH Reaches Zero
Along with monitoring QOH's before listing an item, you'll want to continue monitoring quantities throughout the auction. If you notice quantities dropping each day, you'll want to keep an even closer eye on it.
You can't drop ship an item that isn't there. If the quantity ever reaches zero, go into your auction right away and end it early.
Drop Ship an Item to Yourself to "Pad" your Inventory
Shipping a few items to yourself to pad your inventory is perhaps the most effective fail-safe to prevent backorders from having a negative impact. This is particularly advisable for items that are regular sellers for you.
Usually, you'll only need to keep one or two items in your personal inventory, even if you typically have several auctions with the same item running simultaneously.
If an item goes out of stock, you'll always have the one or two items on hand that you can ship out and still have time to go through and end all your other auctions early until the item comes back into stock.