Drop Shipping 101: How to Manage Inventory for your eCommerce Business

Are you interested in learning about how to manage inventory for eCommerce business, specifically one working through drop ship relationships?

I’ve been running my own Amazon Marketplace store for the past 8 years and all of my supplier relationships have been through the drop ship business model. When I was first starting in college, I had no idea what it would take to manage all of the inventory from the suppliers that we were creating relationships with, but over time I learned the ins and outs and became an expert at the process.

I must say that managing inventory for your eCommerce business is one of the most tedious processes when you are using drop shipping. It takes an amazing amount of focus in order to ensure that all of your products are in stock and ready to ship according to the data from your suppliers. At the peak of my Amazon business, my team and I were working with over 1,000 drop ship suppliers and managing over 1,000,000 products on our Amazon store. It was no joke and if we weren’t doing it right, it could lead to bad sales and angry customers.

In this article, I will break down what it takes to manage inventory for your eCommerce business when working with drop ship suppliers. I’ll explain how data is exchanged between you and the supplier and the system that you should set up in order to properly manage your inventory and make sure that all of your products are accurately displayed for sale.

The System to Manage Inventory for your eCommerce Business with Drop Shipping

First, let’s set the scene. You are a relatively new eCommerce seller (maybe just starting your store or you’ve been in business for 6 months) and you’re setting up the systems and processes that will allow your store to run efficiently without you involved every single minute.

You’ve formed a relationship with a reliable supplier that has the ability to drop ship and you’re getting your inventory methods set up so that you can make sure that the products you are listing on your store are always in stock and ready to ship. You’ve received the initial product data and inventory levels from your supplier and you’ve taken the time to upload them to your online store. The product listings are looking good with content, images, and even some video tutorials, and you’re ready to push them live.

Inventory Update Sheets

Through speaking with your supplier in the initial relationship formation steps, you’ve learned that they send inventory updates every week. That means that their products move fast enough that they need to tell their network of sellers which are in stock still, which are out of stock, and which are close to going out of stock. They’ve sent you a sample spreadsheet displaying the inventory updates and here is what it looks like:

For your reference, inventory update sheets can come in many different forms. Here is another example:

 As you can see, some suppliers will send inventory updates with the actual stock level that they have in their warehouse while others will simply give you a Y or N to indicate if it is in stock. Both of these sheets also show estimated “back in stock” dates for the out of stock products, but that is more of a luxury. Most suppliers will not provide that simply because they don’t have their inventory and warehouse organized enough.

Regardless of how the inventory update is received, it is your job to make sure that the data is properly mapped to the products listed on your store so that out of stock (OOS) products are pulled down and in stock products are up for sale. In this next section, we’ll dive into the mechanics to make that happen with Excel spreadsheets.

How to Update Inventory Levels from Supplier Stock Updates? Find the answer here https://connorgillivan.com/drop-shipping-101-manage-inventory-for-ecommerce-business/