Warehousing Fulfilment or Drop-Shipping as a Method for Bootstrapping

Suit WarehouseThe vast majority of our posts have been squarely focused at growing companies – the ones that haven’t had any shocks to the system, no supply issues and no unexpected costs. Every business will encounter one of these problems at one time or another – regardless of how prepared you feel your business is. However, if you are a retailer that has gone deep in a product range that just hasn’t sold and you need to liquidate your stock, what do you do?

You can turn surplus stock into cash quickly by:

  • Cost Pricing – simply reduce your retail price to what you paid for the stock in the first place – or just above. This is always a distressing thing to do, but if needs must then you have no alternative. You could always turn this to your advantage. You could tie it into a marketing strategy with the aim of increasing your customer base and search marketing performance.  A good way to manage cost pricing is to actually tie it into a much more profitable product. It is unlikely that you cannot sell all of your stock. If you do have some good sellers then have a “Buy X, get Y free” sale.
  • Donate the products to charity –  you may be able to offset the cost of this against tax and earn some good PR.
  • Look at your channels – sites such as Amazon, eBay and Play.com have massive customer-bases. Seemingly everything sells at the right price. If you’ve not sold on the services before they may take a bit of time getting set up and used to, but the skills learned here will hold you in good stead for the future. Load your products up with great titles which include all the ways that you can think of searching for it.
  • Review your marketing material – often products won’t sell because there isn’t sufficient information available.. Often this relates to sizes and colours. If you’re selling jeans then make sure that you detail the available sizes – including length.
  • Sell to a liquidation company – These organisations exist to buy stock as cheaply as possible because they believe they have the means to sell anything. You’ll be selling at a discount and your potential returns are likely to be less than your other options, but if all else fails.

That was just the first stage of the bootstrapping process – either make your slow-selling products move faster naturally, or force the issue with a liquidation company. After you’ve been through that process and you still need to bootstrap your retail business and you’re considering either drop-shipping or using an outsourced warehousing fulfilment company here are some points worth thinking about:

  • Obviously with drop-shipping you no longer hold any stock. That is a cost that the drop-shipper bares. The downside to this is that they will factor any potential costs into the rate you are charged.
  • You can certainly launch a website fairly quickly – if you’ve got the drop-shipping contacts and product range in order. With a solution such as ours you will still need to ship your products into our warehouse.
  • With drop-shipping you don’t need to pay for a warehouse and the staff and overheads associated with it. This is a great way to relax the pressures on your cash flow. But that is also the case with Cloud Fulfilment as you simply pay for the picking, packing and shipping per order – you don’t pay for staff waiting for orders to come in. The same is true of capacity. You only pay for the storage space used per day (one meter cubed minimum).
  • You will need to do your own research on which drop-shippers have good reputations and which don’t. We can’t comment any further, but there are some drop-shippers that many have said should be avoided.
  • You may be able to put pressure on your drop-shipper to package and send out products in the way you like them to be, so it’s best to decide if that is something that is essential to  you.
  • Often with drop-shipping the fees associated can be complex. It is essential that you have clear information as to what you will pay.
  • When you buy in bulk you are likely to receive significant discounts on drop-shipping prices.
  • You will need to investigate the costs associated with integrating your website into their systems. With Cloud Fulfilment we make the fulfilment process simple and pain-free as we give you free access to an API which connects very simply to virtually all shopping carts.

Undoubtedly we have a preference for the outsourcing of your warehousing needs and automating your entire pick, pack and ship process. One of the major reasons that stock doesn’t shift is due to marketing. Outsourcing the fulfilment process will allow to focus more intently on growing your business after a temporary setback.