Four NFL-Proven Ways to Avoid Dropping the Drop Shipping Ball
By: Dylan Hogan
Sunday night’s Super Bowl broadcast is expected to attract over 188.5 million viewers and generate over $15B in retail sales. Many online retailers are running Eagles vs. Patriots promotions and have customized their home pages with cool images and discounts.
Super Bowl assortments, filled with apparel, home goods, and jewelry merchandise, are usually drop shipped because of inventory availability and other supply chain considerations. Unfortunately, a small number of retailers are dropping the drop ship ball by including products featuring the likenesses of players no longer on rosters of the Super Bowl teams. In one example, a major retailer is featuring a wall decal of a former player that has not been on the roster since 2012!
As the old retail adage goes, “Retail is about the detail”, and small assortment mistakes hurt the retailer brand and undermine the work required to build successful promotions in the first place.
Without the right playbook, drop shipping can increase assortment mistakes. This blog discusses four strategies leading retailers use to avoid these types of fumbles.
Four Strategies for Avoiding Drop Ship Assortment Mistakes
1. Leverage real-time inventory data to dynamically adjust what products to display
The two NFL teams playing in Sunday’s big game will be using Microsoft Surface Tablets as part of a $400 million deal with the NFL. Both coaches and players will be looking at real-time data to try to gain advantage over their competition.
Leading retailers running drop ship programs do something similar with real-time inventory data. In this model, drop ship suppliers broadcast on-hand quantities and inventory statuses across all SKUs in agreed upon assortments. Retailers automatically remove SKUs that have zero on-hand quantities or low inventory availability from their ecommerce websites. SKUs that have not been updated in a particular period of time are also automatically removed.
Accurate inventory visibility is vital to drop shipping success. Retailers can avoid scenarios where old and outdated products remain on sale by utilizing data and systemic integration.
2. Develop exception-based processes to resolve unavoidable issues
Turnovers and penalties will undoubtedly play a part in the outcome of Super Bowl LII. While coaches and players wish for the perfect game, they plan for the reality of things going wrong. The ability to overcome adversity and make in-game adjustments is often what separates winners and losers.
Operating a drop ship program is no different. Scenarios like mispriced products, incorrect product descriptions, and outdated items being displayed are all part of the ecommerce game.
Leading retailers design business processes that coordinate people and technology to optimize resolution. An example of this is a retailer’s late order resolution process. A good process features both automatic emails alerting suppliers and escalation workflows that bring people together to deal with exceptions.
Success involves both retailer and supplier teams knowing whom to reach out to before problems occur as well as how to remediate them. Suppliers are typically very good at reviewing their own products on sell-through channels and can identify issues better than retailers. Good retailers take advantage of this expertise to strengthen their teams.
Developing strong internal processes can fix assortment-related issues fast, resulting in minimal risk for the retail brand.
3. Periodic and proactive merchandise assortment reviews
NFL coaching staffs review game films to assess player performance and make adjustments throughout the season and even during the game. Plays and formations are added or removed from the playbook based on the coaches’ observations.
Evaluating online assortments requires a similar approach. Drop ship assortments are more complicated due to the large number of products and limited merchant familiarity. These assortments tend to get more disjointed over time as employees turnover and strategies change. Online updates typically also require coordination of multiple teams to implement changes. Leading retailers are passionate about keeping extended assortments fresh and rarely display products that do not make sense to their customers.
Drop ship programs that dedicate themselves to regular assessments of their extended assortments achieve higher sales and less cancelled orders.
4. Select suppliers who are true teammates
NFL front offices evaluate player performance and make personnel decisions at the end of every season. While some all-stars receive contract extensions and become fan favorites, others see their contracts terminated because they are not good teammates in the locker room.
Leading drop ship programs take a similar approach to supplier relationships. They recognize the important role suppliers play in serving their customers and they utilize operational data to assess their extended team. They look for opportunities to expand business with smaller suppliers that exceed expectations and substitute bad performers with new partners.
To do this right, retailers define and share key performance metrics when onboarding new suppliers and constantly communicate program changes as they are made. Once suppliers know what they are being measured on, they know the rules of the game and can partner accordingly.
Programs that treat suppliers as teammates create more efficient operations, leading to wins for retailers, suppliers, and most importantly, customers.
Having grown up in Philadelphia, I am rooting for my hometown Eagles on Sunday. Being an over-40 weekend warrior, I am also pulling for Tom Brady to win another one for old guys everywhere.
But no matter who wins the big game, retailers lose if they do not pay attention to the details required to run a successful drop ship program.
Enjoy the Super Bowl!