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Product quality

Q4 Headaches: The Wrong Way to Drop Ship

November 16, 2017 1 Comment

 
By Lesley Hensell

 

Babies R Us advertises a bouncer on Black Friday for a mere $29. On Amazon, it’s selling for $98. It’s an amazing flip.

Your local store is out of inventory, but there is plenty available on the Babies R Us web site. Just create an Amazon MFN listing, and have Babies R Us send the product to your buyer, right?

Wrong. The temptation may be tremendous. But don’t turn your Black Friday into a bust with dangerous drop-shipping.

Does Amazon allow drop-shipping?

First, let’s clarify what drop-shipping means. Drop-shipping is a fulfillment method where a third-party seller never sees nor touches the inventory. The third-party seller accepts an order from a customer, and then it triggers another company to fulfill the order.

Amazon allows certain kinds of drop-shipping. A third-party seller can establish a relationship with a vendor such as a manufacturer or distributor. That manufacturer or distributor can then drop-ship on behalf of the third-party seller. Amazon is totally cool with this arrangement, but only if your shipping statistics remain in the green.

There is another kind of drop-shipping that is specifically prohibited by Amazon. It’s called casual drop-shipping. Meaning, no real vendor relationship exists between the third-party seller and the shipper.

Consider the Babies R Us situation above. To fulfill that order, a third-party Amazon seller would put their buyer’s name in the “ship to” section of an order on the Babies R Us web site. The item would ship from the Babies R Us warehouse directly to the end-buyer.

Why informal drop-shipping can be dangerous:

  1. The item arrives in a Babies R Us box. Or it comes in a box from Target, Walmart or another retailer that competes with Amazon. This makes customers unhappy.
  2. The item typically includes an invoice with the actual price paid to Babies R Us. This makes customers angry, since they probably paid between two and four times that amount.
  3. The seller has absolutely no way of controlling product quality. Amazon expects you to ensure that the items you sell meet its stringent product quality standards. If you never see the inventory and have no formal relationship with the vendor, you have no say in quality.
  4. Larger items are often shipped without an outer carton. Shipping stickers are placed directly on the box, which is beaten up by the time it arrives. This does not live up to Amazon’s standards for third-party sellers.

What about doing drop-shipping the right way?

Drop-shipping with formal vendor arrangements can be an excellent sourcing method for some sellers. But just like anything else, it requires careful management and monitoring:

  1. Have a discussion with your vendor about product quality. Ensure they are only sending your customers items in gift-giving condition.
  2. Find out about your vendor’s packing protocols. If items need to be in a box, make sure they aren’t being shipped out in a padded envelope.
  3. Establish rules for fulfillment times. Carefully monitor your orders and make sure they are going out on time- every time.
  4. Require timely uploading of tracking numbers for each and every shipment.
  5. Whenever possible, automate the entire process, from order transmission to tracking number upload. This greatly reduces human error.

Have questions about establishing a successful drop-shipping relationship? Call on Riverbend Consulting.

image credit: eranicle/Shutterstock

Filed Under: Amazon, Fulfillment, Inventory Sourcing Tagged With: Drop-shipping, Inventory Flips, Online Arbitrage, Product quality, Tracking Numbers

Account health starts with product quality

November 13, 2017 Leave a Comment

So you found the perfect product. Sales rank is stellar. The price is right. The listing has limited competition. What could go wrong?
I’ve got two words for you: product quality.

By Lesley Hensell

In years past, Amazon assigned the blame for many product quality problems to manufacturers. Sellers just had to be sure they sold new goods in pretty boxes without dents or dings. That is no longer the case. Account health starts with product quality.

Amazon now expects sellers to sell quality products that garner as few customer complaints as possible. The proof for this, is in the ever-increasing number of ASIN suspensions. These suspensions focused on everything from inauthentic to used sold as new, to safety incidents, and more.

Why has Amazon undertaken this strategy?

  • Knock-offs. Whether they are from disreputable sellers here in the United States or overseas, inauthentic goods have flooded the Amazon platform. To remain a trusted source for customers, Amazon had to combat this influx of fakes. Suspending ASINs with inauthentic complaints and demanding invoices as proof of authenticity is happening more than ever.
  • Warehouses bulging with cheap Alibaba goods that nobody wants. Amazon has been flooded with poor-quality goods that simply don’t sell. The company needs to get those out of their warehouses and out of the catalog. That’s one reason Amazon has become more aggressive with fees and policies for FBA long-term storage.
  • Irresponsible sellers. I hate to say it, but it’s true. Sellers have shirked their responsibilities. Far too often, a seller has high returns for a poor-quality item, but doesn’t act – or even notice.

If you have an ASIN suspended for product quality, does that mean you are selling fakes or acting irresponsibly? Absolutely not! But as most Amazon sellers know, the whole class gets punished for the actions of a few troublemakers. Amazon has ratcheted up enforcement on product quality, and it is now sellers’ responsibility to act accordingly.

You can combat product quality problems at three stages of the Amazon selling game.

Sourcing:

  • Don’t just consider margins and sell-through rates. Look at the quality of the product. Read reviews. If there are only 3 stars and a bunch of unhappy customers on Amazon.com, consider passing on the buy.
  • If this is a high-volume wholesale or PL buy, do more extensive research. Ask about product testing, materials and more. Don’t buy something that might fall apart, break easily, or has poor directions.
  • Use the product. Try to break it. Consider how other people of different backgrounds might use and abuse it. This kind of thought process can reveal shortcomings and product quality issues.

Shipping:

  • Can your product arrive to the buyer in pristine condition? If not, you have a product quality issue. For example, some pressed-powder cosmetics are in flimsy boxes, leading to breakage. Without upgraded outer packaging, you will have many unhappy customers.
  • Shelfware, dented boxes, crushed containers – none of these qualify as “new” under Amazon’s condition guidelines. Empower your shipping team to remove less-than-perfect product from your shelves to ensure it isn’t sent out to customers. Each item should be in gift-giving condition – like a gift you would give to your prospective mother-in-law with OCD.
  • Padded envelopes are much cheaper than boxes. However, these envelopes also allow for much more damage to occur during the shipping process. If an item could be damaged during transport, consider upgrading to a box with adequate dunnage.

Monitoring:

  • Run return reports frequently. Hardline items should have return rates of less than 3%.
  • Check the reasons for returns – even if your return rate is acceptable. Find out why your customers are returning items and what makes them unhappy. Don’t ignore these issues. Address them.
  • Read product reviews. Yes, there are difficult customers. But even cranky people can provide valuable feedback.
  • Assign someone in your company the duty of monitoring, measuring and acting on this data. Make it part of their weekly responsibilities. Don’t let it slide.

Need a check-up? Contact Riverbend Consulting.

 

Lesley is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.

image credit: Oliver Le Moal/Shutterstock

Filed Under: Amazon, Fulfillment, Inventory Sourcing, Seller Performance Tagged With: Amazon condition guidelines, Amazon product reviews, Fulfillment, Inauthentic, Product quality, Return reports, Shipping, Sourcing

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