Dropshipping is popularly known as a business model without inventory headaches.
But does that mean you don't have to worry about your dropshipping inventory at all?
The answer is yes, and in this guide, you will learn why inventory management is important for a successful dropshipping business.
You will also learn the best practices for managing your dropshipping inventory and the apps you can use to minimize your workload.
Let's get started!
What is dropshipping inventory management?
Inventory management in dropshipping refers to actively pursuing the levels of stock your supplier has for the products you sell on your dropshipping store.
It involves real-time inventory tracking with your dropshipping suppliers and updating the inventory levels in your store so your customers get live information on the availability of your products.
So, it is vital to have effective communication with your suppliers at all times to ensure smooth order fulfillment.
You can communicate with your suppliers manually or use more effective automation methods to synchronize the inventory in your store.
Tip: Looking for an all-in-one article about everything you should know about dropshipping? If so, check out our dropshipping guide!
Dropshipping inventory management: Why is it important?
While you are adding new products to your dropshipping store, you might ask yourself:
'What if the product goes out of stock with the supplier when I get orders?'
That's the primary motive behind inventory management!
Suppose you have created a list of winning products and are ready to scale up.
You run marketing campaigns to promote those products, and when you get orders, your supplier has already sold all units.
More so, you may also come to know that the product page or supplier has disappeared from the dropshipping platform.
This is common at dropshipping websites like AliExpress, especially with new suppliers.
As a result, you would face order fulfillment challenges for oversold items.
Additionally, you would have to kill your ad campaign and may lose the money you paid for promoting the items you couldn't sell.
So, dropshipping inventory management is important as it prevents you from overselling and facing stockouts from your suppliers.
Let's understand the concept of dropshipping inventory management from another situation.
When you get a dropshipping order, a customer expects to receive the order within the promised timeframe according to your store's shipping policy.
But if your supplier cannot fulfill your orders, you have minimal options.
You may look out for the same or similar products from other suppliers, resulting in delayed shipping times and quality control challenges:
If your customers find out the product they received is different than the one they ordered, you may face daunting processes of product returns or refunds.
You can avoid such dropshipping nightmares by implementing good inventory management that saves time and helps streamline the overall dropshipping process.
9 Best practices for managing inventory when dropshipping
Now that we have established the importance of inventory management in dropshipping, let's go through the best practices for managing inventory.
You can take inspiration from these practices and implement similar strategies in your store.
1. Use inventory management apps
Manual inventory management is time-consuming.
While you may use traditional methods like dropshipping with CSV files, there are better ways to save time and effort.
You can use inventory management apps that integrate the suppliers' inventory levels with your dropshipping store and keep the information updated at all times.
A good inventory management app saves you from the hassle of checking for the inventory with your supplier every day.
You can get that information live by logging into the integrated inventory management apps.
We will recommend the top inventory management apps later in this article so you can use one to synchronize your inventory.
2. Find a reliable supplier and establish a good relationship
Your supplier is the main pillar of your dropshipping business.
So, you must know how to choose the best dropshipping supplier to run your business smoothly.
Consider asking the right set of questions from the dropshipping suppliers to identify if you can trust them with your business.
Once you are sure to have selected reliable suppliers, the next step is to establish and maintain a good relationship with them.
A professional relationship with your suppliers will give you many benefits. They will keep you updated with their stock levels and will fulfill your orders on priority.
Tip: Closely monitor your sales trend to predict orders and arrange inventory beforehand to avoid order fulfillment issues.
3. Have an alternative supplier ready for when things go wrong
As much as you trust your dropshipping suppliers, you must always have a list of alternative suppliers ready to cope with unexpected situations.
You may have a smooth working relationship with your suppliers, but nothing is certain and for granted in ecommerce, especially dropshipping.
Consider the situation in the fourth quarter (Q4) of the year.
As Q4 is full of holidays and shopping events like Halloween, Black Friday, Christmas, and New Year, many suppliers may go out of stock overnight.
Think of this from your suppliers' perspective. Suppliers always want to sell their products as quickly as possible, and you are just another customer for them.
Your supplier may have thousands of units of the SKUs you sell in your store, but if he gets a large wholesale order, he won't hesitate to sell all of them and call it a day.
So, always make your fulfillment strategies by going into your supplier's shoes and keep a list of multiple dropshipping suppliers ready at all times.
Tip: Consider hiring the services of a dropshipping agent to source products from the pool of vetted suppliers at affordable costs.
4. Create a good dropshipping return and shipping policy
Online buyers trust websites with proper pages for policies.
A good dropshipping store must have dedicated pages for their return and shipping policies.
If your customer is not satisfied with a purchase, he may want to return the product or demand a refund.
So, you must know how to create a dropshipping return policy and mention every detail to be on the safer side.
Ideally, you should specify all the steps and conditions for a valid return process.
This will help you avoid facing problems later on.
As you won't have possession of dropshipping inventory, we recommend that you come to a mutual agreement by offering your customers an incentive to mitigate their unfavorable experiences.
Similarly, a well-crafted shipping policy will also cover risks associated with the unprecedented dropshipping inventory over which you have little to no control.
You can write a general statement in your shipping policy that you ship items from multiple locations around the world, and the lead time depends on the item's location and the delivery address.
To give your customers an idea of the delivery time, you can mention that your items may take two to four weeks to deliver.
Some dropshipping businesses write even more days to secure late deliveries.
Let's check out one example from a dropshipping store called More Than A Backpack:
This dropshipping store has mentioned the estimated delivery times to major regions of the world.
They have also mentioned that they will accept refunds only when a customer doesn't receive the order within 60 business days.
You can also implement similar strategies in your dropshipping business.
This way, your customers will develop a tentative expectation of the delivery date.
Additionally, you can make your customers happier if your products are delivered earlier.
5. Learn how best to treat your customers
You can conquer your customers by providing excellent customer service.
You must treat your customers in the best possible ways so they may also cooperate with you.
You may often get complaints like late deliveries, missing packages, and wrong product deliveries.
While you may not compel your suppliers to expedite the delivery process or keep dedicated inventory safe for your orders, you can always satisfy your customers by listening to their problems and providing prompt solutions.
So, your store must have easy-to-use options for your customers to contact your support team.
Here is a good example from a dropshipping store called For My Doggy:
As you can see in the screenshot above, this dropshipping company allows their customers to contact them via phone, email, live chat, or postal mail.
Their customers may easily contact this store using the most convenient option.
6. Create an FAQ page on your dropshipping store
You can also draft an FAQ page on your dropshipping store to answer the questions your customers frequently ask.
This will save time for your support team and your customers.
Here is an example from another backpack dropshipping company called Eiken:
They have created a good FAQ page that answers almost every question their customers may ask.
Let's examine what they have written for the customers who don't receive their orders:
As you can see in the screenshot above, they have asked their customers to wait for 'a reasonable period of time', which is 30 days (most probably after the promised delivery date.)
They have also asked their customers to 'be patient' if they don't receive their orders, and they will 'resolve the issue' to make them happy.
You can also write similar conditions on your FAQ page to gain ample time to resolve issues related to your inventory.
Another great tip you can use to update information about your inventory is to use announcement banners on your dropshipping store.
You may have seen announcement banners displaying key announcements on top of some dropshipping stores.
This announcement can be related to any aspect of your business, including your inventory.
Take the following example from a dropshipping company called MaxPush:
As you can see in the screenshot above, they have used two banners on their homepage to display important information about their store.
They have also mentioned that only four MaxPush Boards are left in their stock by using a red warning sign.
Although they may have mentioned low quantity to benefit from the FOMO (Fear of Missing Out) factor, such information can also be used to show low stock levels for critical products.
You can use similar banners and put information about your inventory to reduce frequent customer complaints and refund requests.
8. Tag products with critical inventory levels
You can also use product tags in your dropshipping store to show whether a product is 'low in stock,' 'sold out,' or 'back in stock.'
Ideally, you must tag high-selling items in your store with stock updates so your customers are aware of the stock levels before ordering.
Your customers will not only buy the product in a hurry but also know that the product may go out of stock at any time.
Let's look at an example from a dropshipping store called Meowingtons:
As you can see in the screenshot above, they have tagged products with 'low stock.'
Customers interested in buying that item are more likely to order quickly because they wouldn't want that product to go out of stock.
Additionally, such tags would also mitigate your customers' disappointment if the product is not delivered for being out of stock during order fulfillment, as they would already know that the product was low in stock.
Similarly, your store must immediately show the stockout products to avoid overselling.
Here is an example from a decor dropshipping store called Novus:
They must have synchronized their inventory with their supplier.
That way, their store automatically tags products with zero inventory as 'sold out.'
Furthermore, you should also update your product tags whose inventory is available again for purchase.
Let's look at an example from a dropshipping store called Homeplistic:
They have tagged a particular product as 'Back in stock.'
Such tags will inform customers that some products in your store may go out of stock, but you also restock them.
So your customers can confidently place orders that they will be served sooner or later.
9. Mention expected delivery estimates on the product page
Every business avoids refund and return requests.
Your customers must know when to expect their orders from your store so they don't develop false expectations.
Every customer may not read the policy pages on your store.
While you may get orders from experienced online shoppers, there are chances that your amazing dropshipping products attract first-time shoppers, too.
While you can write every detail on your policy pages, you may still get refund requests from customers who didn't have time or awareness to read those policies.
Online customers of fast shipping websites like Amazon and Walmart usually have little experience getting their orders delivered after weeks.
So, it would be good to mention the estimated delivery time of every product on every product page.
Let's check out an example from a dropshipping store called Plushyz:
As you can see in the screenshot above, they have mentioned the estimated delivery date just around the 'Add To Cart' button to make it easily noticeable.
While this may prevent a few orders from customers who want the products earlier, it will clarify your customers' delivery estimate and avoid getting frequent refund requests.
You can also write a general estimated delivery expectation in the product description, just like this decor dropshipping store called Warmly:
They have informed their customer to 'expect 2-4 weeks for items to arrive (to be safe).'
You can also write similar statements about your shipping times in every product description.
This gives you enough time to arrange the stockout inventory and prevents you from getting frequent refund requests.
5 Best dropshipping inventory management apps
Updating the inventory of every product in your store manually is an endless job.
Plus, you can't be sure of the stock levels with your supplier in the next minute of updating your inventory.
So, the best option is to use dropshipping inventory management apps that automatically synchronize stock levels of the products in your store with your suppliers.
Let's discuss the five best dropshipping inventory management apps that will make your job easier and more accurate.
These will mostly be supplier apps that directly sync the supplier's inventory with your store.
1. Stock Sync
If you run a Shopify dropshipping store, Stock Sync can be an excellent app to synchronize your inventory levels across multiple sales channels.
This app allows you to easily import and export your inventory data using various data sources, including Google Sheets, XLS, and CSV files.
The comprehensive scheduler on Stock Sync helps you update your inventory levels automatically and remove unwanted products from your store, saving you time and manual effort.
You can also use quantity rules on this app to help you avoid overselling.
This app works well if you want to synchronize inventory with multiple suppliers. Your suppliers can be aware of the inventory levels in your store and update their stock accordingly.
In addition to stock synchronization, this app allows you to add price conditions to define your profit margins per product.
Stock Sync offers a Free Plan with limited SKUs and some manual updates. The paid plans range from $5 to $25 per month.
All the plans come with a 14-day free trial.
Spocket is an excellent app to facilitate dropshippers in finding high-quality products from reliable suppliers, especially from the EU and the US.
This app allows dropshipping automation solutions, including real-time inventory synchronization with your suppliers.
Spocket regularly updates its suppliers with inventory levels using color codes.
The red indicates that the supplier is left with less than 10 units of inventory. Orange indicates 11 to 50 units, and black indicates 50+ units.
These color codes help suppliers arrange critical inventory beforehand so the dropshippers don't face stockout issues.
If a product goes out of stock with a supplier, it will automatically appear as 'Sold Out' on the dropshipping store integrated with Spocket.
Spocket's paid plans range from $40 to $299 per month:
Every plan comes with a 14-day free trial period.
You get a significant discount (up to eight months off) if you choose yearly plans.
Exclusive Spocket offer: Enter the coupon code: SpocketTrial during checkout, and you'll instantly unlock a FREE 30-day trial. Click here to redeem your free trial now!
In addition to synchronizing your inventory levels with AliExpress suppliers, you can use this Shopify app to find more suppliers for similar or different products.
This app also helps you fulfill hundreds of dropshipping orders in a few clicks, saving your precious time and manual effort.
You can also use DSers to set pricing rules to decide your profit margins. This app also keeps you updated with the tracking information of your fulfilled orders.
Above all, you can synchronize the inventory of your multiple dropshipping stores using one DSers account.
DSers offers the Basic Plan for free.
Beginners can use the Basic plan for bulk ordering and synchronizing 3,000 products in up to three dropshipping stores.
The paid plans come at $19.90 and $49.90 per month with extended features, like synchronizing more products and adding more stores into your DSers account.
Syncee is a dropshipping platform where you can find global suppliers for high-quality dropshipping products.
It offers much more than that, though!
You can integrate your dropshipping store with Syncee to automate your dropshipping processes, including inventory synchronization, order fulfillment, and order tracking.
With its DataFeed manager, you can even access suppliers outside Syncee.
In addition to Shopify, Syncee can be integrated into other platforms, including Woocommerce, Wix, and Squarespace.
You can use Syncee to update your inventory using multiple file formats, including XLS, CSV, and TXT.
You can easily automate stock levels on your store by clicking the 'Sync' button on your Syncee's dashboard.
Syncee automatically updates your inventory one or two times a day.
If a product is out of stock, you can hide it from your store or show it as 'Out of stock.'
Syncee offers the Starter Plan for free, but it doesn't have an auto-update feature.
The paid plans come at $29, $49, and $99 per month.
They offer a 14-day free trial period for every paid plan.
Trendsi is another awesome platform for dropshippers especially focused on fashion items.
This app integrates with your Shopify store so that you can find and add fashion items on this platform.
They automatically fulfill orders on your behalf and also send an invoice with your brand's name.
Additionally, they also handle your returns.
Their app provides real-time inventory synchronization, so you don't have to do it manually.
They keep restocking their depleting inventory to avoid products going out of stock.
The only downside of Trendsi is that it focuses on fashion products and facilitates order fulfillment within the US.
Trendsi is free to use.
Before we move on to the conclusion, let's quickly recap what we just learned in this article.
Here are the following key takeaways so that you may recall them easily:
- Although you don't maintain inventory in dropshipping yourself, you need to coordinate with your suppliers to update stock levels on your dropshipping store.
- You must be vigilant about your dropshipping products and suppliers, as they may suddenly disappear.
- Good inventory management in dropshipping avoids selling out-of-stock products, minimizing refund requests and negative reviews.
- Carefully crafted policy pages and good customer service can mitigate bad customer experiences.
- You should use apps to automate inventory synchronization and show critical stock levels on your dropshipping store.
That's it! You had it all about dropshipping inventory management.
We hope this article has revealed how important it is to manage your dropshipping inventory with your suppliers.
Do tell us about your thoughts on the best practices we discussed in this article for managing your dropshipping inventory and your favorite app to automate this process.
You can contact us any time with your questions about dropshipping.
Being proactive is the key to success in dropshipping, and that's what inventory management is all about!
Good luck with your dropshipping journey!
Want to learn more about dropshipping?
Ready to move your dropshipping store to the next level? Check out the articles below:
- Dropshipping Pricing Strategy: The Definitive Guide 2024
- Dropshipping for Beginners: What Is It & How to Start Today?
- Why Is No One Buying From My Online Store? (14 Things To Check)
Plus, don’t forget to check out our in-depth guide on how to start dropshipping here!