Drop Ship Selling Is a Recipe for Success (OPINION)

Walmart.com continues to gain momentum by challenging Amazon as a top-tier solution for the online shopper.

Amazon currently has more than 200 million items available on its site versus Wal-Mart Store Inc.’s having more than 9 million. So, to improve its offerings, Walmart is dedicated to adding 1 million items per month to its online offerings.

 As part of this, Walmart is asking the supplier community to help transform its online item selection. We have seen Walmart recently upload all of its store-only items online, so that the customer can research and see a wider assortment for his/her needs. Walmart continues to build on its online item mix, and one of the ways to do this is by driving success through working with drop ship vendors (DSV).

Who is a DSV and why would someone want to become one?  A DSV is a vendor that manages its supply chain by shipping directly from its facility to the customer or a Walmart store to be picked up.

These vendors use a Walmart shipping label to send product to the customer out of the vendor’s facility where they house all inventory. This is a cost-effective method for Walmart because it does not need to house any inventory to support these items.

This also allows Walmart.com to test products to see how they will do. Recently, Walmart’s Made in the U.S.A. Open Call allowed all vendors to put their items on Walmart.com to test the waters. For a Walmart vendor, this is a great way to prove the success of their items. It also allows a vendor to establish a relationship with Walmart and manage its own inventory levels.

With this great opportunity, we also see some challenges. If you are not ready for the demands of being a DSV, you may be overwhelmed at first. There are several steps in processing a single drop-ship order, which can be very time consuming if you are not prepared. This process can also be a burden on maintaining a strong margin and managing your labor costs.

As a DSV, doing things well with great customer satisfaction can ead to more business for you. To do this, you will need to make sure you are accurately updating your inventory levels with Walmart.com and shipping on time to the customer.

Walmart.com continues to push for DSV, and those numbers will continue to grow. As you look to see where you want to take your business, you may want to consider this a method to facilitate growth.

Initially, it may be confusing, frustrating and a lot of work as you start the DSV process. Through hard work and focusing on the customer, you can find great success and a rewarding partnership with Walmart.com as a DSV. 

Steven Elliott is senior director of education at 8th & Walton, working with his team of experts to provide educational excellence in merchandising to CPG suppliers. He can be reached by email at [email protected].