Ecommerce is an industry that continues to grow and attract more and more entrepreneurs hungry for success. One of the most popular ways to get started in the ecommerce niche is through dropshipping. While dropshipping offers a low-cost, low-risk way to test the waters of ecommerce, successful brands quickly realize that scaling is difficult when only using a traditional dropshipping framework.
The rise of dropshipping has led way to the rise of dropshipping agents and third-party services, which aim to help dropshipping businesses streamline their supply chain and transition their infrastructure to increase profit margins and decrease logistical headaches. However, it can be a challenge to identify if your business needs a dropshipping agent or a third-party fulfillment service (or even how to choose the right match once you determine which kind of support you need).
We’re going to give the complete rundown to these questions, and more, in this guide. We’ll touch base on what dropshipping is and the challenges of dropshipping that draw businesses to agents or third-party fulfillment services. Then, we’ll explain the differences between agents and fulfillment services, and how to determine which provider is the right fit for your business needs.
Dropshipping is a business model in which ecommerce entrepreneurs sell products without having to carry or store inventory. When a store owner receives an order from a customer, they simply contact the supplier (which is often done automatically), who will then ship the products directly to the customer’s door. Dropshipping is a great way to start an online business with little up-front investment, since investing in product inventory and storage is not required.
While businesses often maintain their own dropshipping operations, it becomes more difficult to do so as a business grows. When businesses hit a higher volumes of customer orders, they often look to dropshipping agents for help. These agents or companies manage the inventory and shipping for their clients’ online stores.
Dropshipping order fulfillment is part of the dropshipping process when a customer’s order is shipped. In traditional dropshipping, the online store doesn’t fulfill the order. Instead, the store passes the order to their supplier, who will fulfill the order directly to the customer. Order fulfillment can be performed by the supplier or by a dropshipping agent. Usually, as a business begins to grow and is looking to efficiently scale, they will look to a dropshipping agent to help fulfill order when volume increases.
Dropshipping offers a number of benefits, particularly for startups, small businesses with low order volume, or established businesses testing a new product on the market. Some of these benefits include:
As stores begin to grow, these benefits begin to diminish, and the challenges of dropshipping begin to shine through.
Dropshipping can offer entrepreneurs an exciting, low-risk way to start a businesses and establish a brand. However, dropshipping is not without its challenges. Some of these challenges have to be dealt with anyone running a dropshipping businesses, some are niche specific, while others can be resolved by partnering with a dropshipping agent.
If you want to be successful in dropshipping, it’s important to find a product niche that is profitable. You want a product that:
As you can imagine, this can be a significant challenge to those hoping to jump into dropshipping. Fortunately, there are a few steps you can follow that can help you land on a profitable niche:
It take time and effort to find a profitable niche, but it’s worth the work. A product with a high profit margin will also make it easier to scale your business as you increase order volume.
When you build a brand, you create an identity and a reputation for your business, but this can present a huge challenge for dropshippers. First, an online store may be selling a generic product (which is common among dropshipping), which can make it a challenge to market it as a better option than other products on the market. Next, it can be a challenge to establish a brand when you don’t have control of packaging, which is common for dropshippers just starting their business.
Dropshipping agents also struggle to help brands establish a high-quality brand. If your business needs this kind of service, you should consider a third-party fulfillment service, like EcommOps. We’ll discuss a bit more about the differences between dropshipping agents and third-party fulfillment services later in this article.
One of the key challenges of dropshipping is sourcing high-quality suppliers who can consistently deliver great products at competitive prices. This can be difficult, especially if you’re just starting out and don’t have any existing relationships with suppliers. You should always use a reputable dropshipping directory, like Oberlo Supply, take time to study review sites, like eKomi or Trustpilot, as well as reaching out to the supplier directly to see what experience they have working with dropshippers.
While managing inventory is somewhat easy when order volume is low, it becomes more of a challenge as your product becomes more popular. A sudden spike in demand can overwhelm your supplier, and since traditional dropshipping stores don’t carry inventory, your customers may end up with long delays. The majority of customers that have a poor shipping experience on their first order with a brand will never return to that brand, so managing inventory is crucial for a dropshipping store.
You need to find a reliable supplier that can ship your products quickly and efficiently while making sure that are appropriately packaged and labeled. If your supplier can consistently package your products and fulfill order promptly, customers will end up with a negative view of your brand, both in terms of product quality and shipping times. Order fulfillment is one of the most crucial aspects of dropshipping, and if your supplier can’t keep up now, they won’t have a chance when you decide to start scaling.
Order fulfillment is one of the primary reasons a business will look to a third-party fulfillment service, like EcommOps, and we can also help find a supplier that’s a better match for your order volume and product niche.
Regardless of how streamlined and efficient your business is, your customers are going to need some kind of support. There will be the occasional product defect that needs refunding or replacing, there will be questions about the shipping status of orders, and returns will be made. Customer support is very time consuming, and many businesses struggle to provide excellent customer support while also running the rest of their business. Again, as with many of these issues, the problem of customer support compounds as your business scales and grows.
Minimum order fulfillment is a common issue in dropshipping. Suppliers usually impose a minimum order requirement on their customers in order to qualify for wholesale pricing and other benefits. This can be a challenge for new businesses that may not have the budget to meet these minimum requirements. Of course, there are many suppliers that have no minimum order fulfillment, but you’ll find higher per-unit pricing with these suppliers.
If you have good relationships with certain suppliers, you may be able to convince them tow waive their minimum order fulfillment. You could also attempt to find a supplier that makes a similar product, which may make it easier for them to work with you as a dropshipper.
There’s no easy solution to this issue, aside from finding a winning product and increasing order volume. You may need to stair-step your way to better suppliers as your order volume grows, especially if you are starting a dropshipping business for the first time.
A dropshipping agent is an individual or business that helps a dropshipping business source their products and fulfill customer orders. Generally, businesses begin to look for help from an agent when the challenges of dropshipping start to become more apparent and begin to press against profitability and general business operations.
A good dropshipping agent can provide a number of benefits to a growing business, like:
While the benefits of using a dropshipping agent are excellent, businesses will only find those benefits by partnering with the right agent. Let’s take a look at what to consider when choosing which dropshipping agent to partner with.
In order to get the benefits of a dropshipping company or agent, you need to find one that is both high-quality and a good fit for your business. Take a look at the following factors you need to consider when choosing a dropshipping company or agent for yourself:
Dropshipping agents don’t offer an unlimited selection of products. Most will operate with a specific industry niche, where they have taken the time to find the best suppliers for the particular niche they service. That means you need to consider what products a dropshipping agent offers and whether those products fit your business.
In particular, you’ll need to consider:
Take time to make sure that a potential agent or company provides the right kinds of products at the best quality and at fair pricing.
One of the primary services that a dropshipping agent or company will offer is fulfilling customer orders, including handling shipments. Of course, that doesn’t happen for free, so you can expect the costs of shipping and order fulfillment to be some of the largest costs you’ll be charged. You need to make sure that what an agent or company charges for these services are crystal clear, and you need to be sure that you avoid any hidden costs associated with these services.
Be sure to specifically ask about shipping times that are available and the shipping costs associated with each delivery speed. They may advertise great shipping costs, but it may not be at the speed you need. Low-quality agents may try to hide the true cost of shipping, so it’s worth it to take the time and flesh out exactly what the shipping costs (and their associated speeds) will be.
A return policy is a set of rules and guidelines that a dropshipping company or agent establishes to determine whether or not it will accept returns of merchandise from customers. The policy may also specify how and when customers can make returns, as well as the process for getting refunds or exchanges.
When you’re choosing a dropshipping company, it’s important to find one with a return policy that meets your needs. Consider the following factors:
Now that you know what factors to consider, you’ll need help getting pointed in the right direction of quality dropshipping agents or companies.
If you are starting your search from scratch, you must take time to research and consider your options. It can take time to find a dropshipping agent that is both high-quality and a good fit for your business. Follow some common sense practices like:
Taking time to research will help you get several options, which will help you get a good feel for what prices to expect and what services are common.
Reputable dropshipping companies and agents will not only have available reviews (which you may have already looked at), but they’ll have contact information and a physical address. If you can’t find this information, it’s a sign that they may be just starting out, or be a single-person operation that won’t be capable of appropriately providing the services you need.
If you can’t find contact information, that should be a good sign to move on. Legitimate dropshipping companies will have a clear online presence, a physical location you can look up, and a clear way to contact
Once you have several options that have been vetted as legitimate companies, you’ll be ready to start looking at service details. Overall cost will be the first item you look for, but you won’t find just a flat fee for service. In particular, you need to examine:
If their prices are out of your budget (or they seem to expensive for what they offer) move on to other options.
You may see shipping times when you examine costs, but you need to take special care and attention to the kind of shipping speeds a potential dropshipping company or agent offers. As we have said, shipping times are one of the (if not the most) important factors to create a positive customer experience, which means your potential choice should be faster than your current shipping times. After all, why would you pay a third-party a premium for shipping times you can do yourself?
While you examine shipping times, make sure you note the cost, if you already haven’t done so. Your ideal shipping speed may be outside of your price range from a specific agent or company (but they may lead with the lowest possible shipping pricing). Just take your time in examining the shipping speeds and making sure they are a good fit for your business.
Customer service will be a huge part of your dropshipping business, and the need for good, consistent customer service grows exponentially as your scale your business and your order volume increases. If a dropshipping company or agent seems to offer poor customer service tools or has reviews talking about lackluster customer service, you should move on.
As a reminder, customer service will include handling:
It can be a challenge to find a dropshipping agent or company that’s the right fit, but picking out red flags is an easy way to narrow down the choices. If you come across any of these red flags while looking for an agent, immediately look to other options.
One of the biggest red flags when choosing a dropshipping company is a lack of communication. This can manifest itself in a number of ways, such as not responding to emails or phone calls, being difficult to get in touch with, or not providing clear and concise answers to questions. A lack of communication will make it a huge challenge to run or scale your business.
A lack of communication is often a sign that the company is not well-organized or that they are not interested in providing good customer service. It can also be an indication that they are not confident in their product or that they have something to hide. Either way, it’s best to avoid doing business with companies that are difficult to communicate with.
Look for companies that are easy to get in touch with and respond promptly to questions and concerns. Also, make sure that you understand an agent’s communication policy (if they say they’ll get back to you within X number of business days, allow that time frame before moving on).
Better shipping times are supposed to be one of the primary benefits a dropshipping agent provides. Long shipping times create a terrible customer experience and can lead to them not buying from your brand again or even cancelling orders. Long shipping can ruin your brand, so it should be a deal-breaker for a potential agent.
Long shipping times can be indicative of an inexperienced company or agent. They could just lack the industry experience needed to provide the most efficient shipping routes, or they might have more clients than they can handle, so the service they provide is subpar. If a company or agent struggles with long shipping times, they will likely struggle with other logistically intensive operations, like warehouse management, stocking inventory, and providing customer service.
Choose dropshipping companies that have consistent, fast shipping times. If you have a potential agent with borderline shipping times, ask them what is preventing those times from being faster, and see if there’s a way to improve them.
Many dropshipping agents or companies will have hidden fees in their services. These are often fees that are buried in the fine print, or they could be fees for services you thought were included in their initial offer. Hidden fees can stack up quickly, and shady companies or agents will rely on you being too fatigued from shopping for third-party services to restart the shopping process.
Hidden fees are indicative of a dishonest business, so if they’re dishonest about the cost, you can expect them to be dishonest about other services they provide as well.
Some common hidden fees include service fees, processing fees, and shipping fees. Make sure you have a full understanding of the entire cost of service before partnering with an agent or company.
It’s common for dropshipping agents and companies to operate within a specific niche or industry. They’ve likely taken the time to establish relationships with suppliers they can trust and reliably provide a great experience for all involved parties. However, if an agent or company has a very limited selection of products from which to choose, this is a red flag.
Limited product selection can be a sign that the agent doesn’t have the inventory capacity to meet customer demand or to support your business as it scales. It will make it challenging to expand your brand and offer new products without choosing a new agent that can support a broader variety of products.
Look for a dropshipping company with a wide selection of products so you can find the right product for your customers. Make sure a company has the capacity to support you while your scale, and that you’re not going to quickly outgrow the services they provide.
If a supplier only offers low-quality products, this is a red flag. Be sure not to confuse this with the occasional fault product or with an agent’s or company’s reluctance to offer a product outside of their capacity.
There are some obvious (and maybe not so obvious) reasons that providing poor quality products is a red flag. The first being, of course, that you need quality products to create a customer base and expand your brand. You won’t be able to grow your business if you don’t get repeat customers and good reviews. Poor quality products can be signs of other issues, like:
Choose an agent or company that is able to consistently provide high-quality products, even if the profit margin isn’t as large as you’d like. You can use those products to build your brand and position your company to scale as order your order volume increases.
A third-party fulfillment company is a business that stores, packs, and ships products on behalf of an online store. In particular, a third-party fulfillment company is not associated with your supplier. Dropshipping agents can be third-party fulfillment companies, though many agents partner with preferred suppliers and receive a financial incentive for directing clients to those suppliers.
While the services they provide may seem similar, there are crucial differences between a dropshipping agent and a third-party fulfillment company.
Dropshipping Agents Have Financial Incentives to Choose Certain Suppliers; Third-Party Fulfillment Company’s Do Not
One of the biggest differences between dropshipping agents and third-party fulfillment companies is that dropshipping agents often have financial incentives to choose certain suppliers. They may receive a kickback or commission, or they may even be an extension of the supplier themselves. A dropshipping agent isn’t always looking for the best supplier and the best prices. Instead, they may simply be shopping clients for their suppliers.
Keep in mind, this isn’t necessarily bad. An agent may specialize in a specific niche and have close relationships with suppliers, so even though they receive a kickback, they’ve chosen to partner with high-quality factories. However, if your business is looking to source products in the most cost-effective way, and want someone to help you find the perfect fit, you’ll have better luck with a third-party fulfillment company.
Third-party fulfillment companies are true third parties. They are not financially incentivized to choose certain suppliers. Instead, they are incentivized to cultivate long-lasting relationships with businesses like yours, and to do so, they’ll help find the best suppliers for your specific niche. The best supplier may be one that:
Dropshipping agents are generally going to be focused on two key aspects of dropshipping: finding your products and fulfilling orders. They generally will not be helpful in areas like:
The specific services provided by third-party fulfillment services will vary (some will offer more than others). However, if you’re looking for a partner to revamp and streamline your entire supply chain (something EcommOps specializes in), you’re better off choosing a third-party provider instead of a dropshipping agent.
One of challenges in dropshipping that we mentioned is that it’s hard to establish a brand, especially if you’re using generic products. A way to overcome the problems with generic products is to use packaging and other branding techniques to make your product stand out, but dropshipping agents can struggle on this front. Unique packaging often requires access to factories or to legitimate warehouses, which dropshippers traditionally are trying to avoid.
Third-party fulfillment services use real warehouse to fulfill orders, and usually have excellent connections to a chosen supplier. This makes branding, especially with packaging, far easier.
Just like trying to choose a dropshipping agent, you’ll need to take your time and do your research when picking out a third-party fulfillment company:
If you’re looking at a third-party fulfillment service, you need to make sure that they have the necessary infrastructure to manage the logistics you need. This is more than just the ability to handle a lot of customer orders. They need to have experience with your industry, or even the kind of brand you’re hoping to establish.
The best way to double-check their infrastructure is to look and see if they have worked with stores or brands that are similar to yours.
Even if they have the infrastructure to handle your order volume or specific products, you need to make sure that a fulfillment company has experience in your specific niche. You’ll need the expertise of:
Any fulfillment service worth partnering with will have records that show how they were able to help businesses. You’ll want to ask for records like:
This is a crucially important step that should not be skipped. If a potential fulfillment candidate cannot provide a track record of success, that either means they provide an inferior service or that they are new to the industry. Either of these are problems for established businesses looking to scale without complications.
There is no single solution that can meet the fulfillment needs of all businesses. A quality fulfillment company will be able to cater their services to meet their clients needs, which can look like:
This isn’t an all-inclusive list, but it should make it clear that a fulfillment provider should be catering services to match your needs. If they can’t or won’t, you should consider another option that will work to specifically meet your business’s needs.
A third-party fulfillment service will work directly with your chosen supplier, which means they can create and enforce quality control processes. An ideal fulfillment provider will be able to show you their quality control protocol, as well as how they plan to make sure that quality control standards are followed for your product. If they can’t, they may not have a physical presence in China (which is a huge issue), or they may not have enough experience to know what kind of quality control protocols they need to follow (which is a another major concern).
Finally, just like with dropshipping agents, an ideal third-party fulfillment service will be excellent communicators. There won’t be language barriers, they will be easy to get a hold of, and they will listen to your concerns and resolve them promptly. Even though this is the last quality on the list, this is one of the most important factors to consider when choosing a fulfillment service. If a candidate company struggles to clearly communicate what they offer and why their services are a match for your business, they will likely always struggle to clearly communicate with you.
In an industry where reliable, fast, and clear communication is critical, you can’t afford to choose a fulfillment service with poor communication.
While third-party fulfillment companies tend to offer more robust services, you still need consider what’s best for your business. Whether you use an agent or third-party service is usually dependent on the volume of products your currently sell. If your business has low volume sales, or if your business is testing a new product and not ready to commit to a large order, then a dropshipping agent will be a better fit.
If your business already has a large volume of orders with proven products, then a third party fulfillment company will be the best fit. They will help you transition from dropshipping to traditional bulk ordering, which is possible when you have consistently high order volume. A third party fulfillment company will be able to handle your order volume as you scale it, all the while continuing to provide the benefits for fulfilling order directly from China.
EcommOps offers excellent benefits that are tough to find with other dropshipping companies or agents. Some of our best benefits include:
We can also help to manage your entire supply chain, not just order fulfillment. That means we can also help:
EcommOps is a true one-stop-shop for your entire ecommerce business. We’re a great fit for established businesses with consistent order volume that are looking to sustainably scale their business. Fill out this form, and we’ll be in touch!
A shipping fulfillment center is a type of warehouse that specializes in storing and shipping products for online businesses. These centers are often equipped with state-of-the-art packaging and shipping equipment, which allows them to fulfill orders quickly and efficiently. Generally, dropshippers will partner with shipping fulfillment centers if they sell a large variety of products or if they have consistently high order volume.
Whether or not you need warehouse fulfillment services will depend on a variety of factors. You’ll need to consider things like:
A dropshipping fulfillment agent is a company (or sometimes an individual) that provides warehousing and shipping services for online retailers.
Dropshipping fulfillment agents offer a number of services, including:
Generally, the more a dropshipping business grows, the more likely they will want to partner with a dropshipping fulfillment agent.
While we have worked with dropshipping businesses before, we have pivoted to become a true third party fulfillment company, not just a dropshipping agent. We still offer the same, excellent services that many of our clients have grown to love, but we’ve transitioned our focus on what we do for companies. Some of the services we offer that dropshipping agents do not are:
We are very selective with the businesses we partner with. In general, we expect businesses to have an order volume of 50 orders per day (and per product). That means we won’t be a good match for startups or smaller businesses. However, we encourage any interested business to fill out our form, and we’ll determine whether our services will be a good match for your business.