August 26, 2010, 3:00 PM

How Wine Country Gift Baskets saves with drop-shipping

The retailer cuts costs while expanding inventory with a web-based drop-shipping system.

Lead Photo

To grow its range of inventory to include items it’s not prepared to warehouse in its own facilities, like fresh flowers and chocolate-dipped strawberries, web and catalog retailer Wine Country Gift Baskets is building its base of drop-shippers. And, thanks to a web-based drop-shipping management system, it’s saving on operating expenses at the same time, says general manager Bill Shea.

When Wine Country started working with drop shippers three years ago, it would overnight packing slips and shipping labels to vendors, then follow up with e-mails, faxes and phone calls to confirm that vendors had received and shipped the orders. The retailer also had to manually enter vendor invoices into its accounting system to reconcile invoices against orders. Even with a person dedicated to reconciling drop-shipping documents, it could take weeks to catch up. “It was not pretty,” Shea says.

Wine Country now employs a web-based application that enables it to electronically exchange orders, confirmations and invoices with drop-ship vendors. The Dropship Manager software system, which is provided by VendorNet, a subsidiary of e-commerce technology and services company GSI Commerce Inc., transmits documents electronically while avoiding time-consuming and error-prone manual data entry; it also automatically reconciles orders and invoices on a daily basis instead of taking weeks, Shea says.

Now, instead of wondering if and when a drop-ship order departed a vendor’s warehouse for a customer, Wine Country receives an instant shipping confirmation in the Dropship Manager. That confirmation prompts the retailer’s e-mail system to automatically send the customer a shipment alert with a link to the carrier so the consumer can track shipment status.

The application pays for itself by eliminating the need to overnight documents, Shea says. Although Wine Country only recently deployed Dropship Manager, Shea says a previous retailer he worked for made back the cost of deploying the application in six months by reducing its document shipping costs.

To get maximum benefit from drop shippers, he notes, Wine Country will agree to purchase a minimum number of items from each vendor, and the vendor will agree to produce a level of safety stock to cover additional demand if and when it materializes. Instead of buying 1,000 Christmas wreaths to maintain in its own warehouse without knowing how many will sell, for example, Wine Country will agree to buy 500 from a drop shipper, who will commit to have another 500 available as necessary.

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