Automated Dropshipping: Everything To Know - Shopify Canada (2024)

Dropshipping is an order-fulfillment method for ecommerce businesses where one party outsources inventory holding and order processing to a third party.

How to Run Automated Dropshipping in 2022 is when you use tools and technologies to run this process on autopilot, saving a lot of time. It is an attractive business model because it requires minimal investment and allows you to focus more on marketing and business development.

What is automated dropshipping?

Automated dropshipping is when a merchant outsources inventory management and order fulfillment to a third party, and the entire process is handled by machines and computers, or automations. Rather than sending orders, approving orders, and picking and packing orders manually, automated dropshipping relies on technology to handle the workflow for you.

Pros and cons of automated dropshipping

Pro: Improved efficiency

One of the biggest benefits of automating is improved efficiency. Rather than waiting on manual reviews, approvals, and communications, automated dropshipping takes everything off your plate. You set the rules, and your technology will follow suit. This means less time waiting on people to move items to the next step in the workflow.

Con: Smaller profit margins

Dropshipping can be profitable if you have an effective business strategy. However, the profit margins are typically smaller than if you were to develop your own product and manage the fulfillment process hands on. Much of the benefit with automated dropshipping is outsourcing the tedious tasks to your tech stack and a dropshipping supplier, but this convenience doesn’t come without a cost. This is why dropshippers often have to sell items at scale to make a real profit.

Pro: Better accuracy

It’s important to have accurate data when making business decisions. Data inaccuracies can lead to costly mistakes. Business automation removes a lot of manual processes, so it also mitigates mistakes that happen due to human error. This improves the quality of your data so you can make better-informed choices.

Con: More technical know-how required

Automating your dropshipping business means you need to understand how to correctly use digital tools and technological resources. You not only have to find the right platforms to implement, you need to perform ongoing maintenance and updates. If you’re bootstrapped and have minimal technical expertise, this can be a sizeable hurdle to overcome, especially in the beginning.

Pro: Less capital required

One of the biggest benefits to dropshipping is you don’t need to invest in inventory. Since your suppliers produce, hold, and ship products, you don’t need to. Plus, the nature of dropshipping is everything is manufactured on a made-to-order basis—so you don’t need to purchase any inventory at all to start selling.

Con: Less control

When you dropship, you give up a lot of control over different aspects of your business. Your suppliers control the product and shipping, while you’re hands off. Some suppliers limit customizations and branding for customer orders. Plus, third parties can make errors that are completely outside your control.

Pro: Reduced costs

Automated dropshipping can reduce costs in a number of ways. First, you don’t lose money to data inaccuracies and human error. Additionally, automation speeds up tasks, reducing the amount of time and resources you need to invest in dropshipping operations. This creates a leaner operation and frees up capital to invest in other areas of the business.

Con: Less flexibility for exceptions

Because you have little control in a dropshipping relationship, you’re often at the mercy of your suppliers’ terms and conditions. In some cases, this can leave little room for exceptions and one-offs. Plus, when you automate everything, more processes happen without manual review or intervention.

How to automate a dropshipping website

If you want to start a dropshipping business and automate it, there are many ways to go about it, including:

1. Search the Shopify App Store for automated dropshipping tools

You can build, customize, and launch an automated dropshipping ecommerce store with Shopify. Start your online store and then install the automated dropshipping apps that work best for your needs. There are many options for all-in-one dropshipping automation software to choose from on the Shopify App Store, including:

• Automizely Dropshipping App. Dropship from platforms like AliExpress, Oberlo, and CJ. Automizely also has automated features for finding the right product pricing.
• Dropified – Oberlo Alternative. Automatically send customer and order information from your Shopify store to your dropshipper.
• Dropshipping Automated AutoDS. Find and import dropshipping products from sites like AliExpress, Amazon, Alibaba, and more. The app automatically fulfills orders and updates tracking numbers.
• Duoplane. Work with multiple dropshipping vendors and streamline order processing with this automation tool. Fully automate your multi-supplier order flow so you can spend more time growing (and enjoying) your business.
• Ordoro. Choose to automatically route dropshippable orders to suppliers or split by default.

2. Streamline order processing with your supplier

Perhaps the most valuable automation option when it comes to your dropshipping business is order processing. When a customer places an order on your website, that order is automatically routed to your dropshipping supplier. This notification tells your supplier about the order and customer details so the supplier can kick off the production and fulfillment process.

Some platforms will also work with multiple dropshipping suppliers and automatically route orders to vendors based on their availability. This is a core feature of Duoplane, for example.

When you automate order processing, you reduce and even eliminate any delays, which gets products into customers’ hands quicker. This is important because online shoppers expect fast shipping—58% of consumers shop online in search of the fastest shipping option.

Tip: Some merchants sell a mix of dropshipped products and items sourced elsewhere. In this case, you can also set up automations to route orders for dropshippable products to the corresponding supplier and all other items to your own internal fulfillment platform.

3. Align inventory control across all channels

When using automation in dropshipping, you want to ensure you have accurate inventory levels. This will mitigate out-of-stocks and overstocks, which are costly challenges for retailers.

Duoplane features vendor inventory feeds, which show stock levels for each of your suppliers. This way, you can see which suppliers have plenty on hand and which are running low, so you can route your orders accordingly.

4. Optimize pricing for your business model

You can automate pricing information, syncing, and optimization for your dropshipping business. Automizely has a “price multiplier” feature to help you do exactly that. With it, you can set your pricing rules and apply them automatically each time you import new products to your list. And with Dropified, you can automatically apply pricing markups.

When you use automatic pricing, establish parameters that protect your profitability. You don’t want to find yourself selling items at a price point where you end up losing money. Likewise, you don’t want to price so high that customers won’t convert.

5. Implement order tracking updates

Order tracking updates are a critical part of the customer experience. It’s important to let shoppers know where their package is and when they should expect to receive it. In fact, more than 87% of consumers say their shopping experience is better when real-time order tracking is provided. Even if you can’t provide up-to-the-minute updates, proactive order tracking notifications or emails can also work.

You can—and should—automate order tracking updates to improve the experience for your customers. Likewise, you should receive order tracking updates as well. This can help you stay on top of any delays so you can offer support quickly.

AutoDS has automatic tracking number updates—once your supplier provides a tracking number, the app will update it on your Shopify store. And Duoplane automatically updates shipment feeds with vendor tracking information. With these feeds, you can get a bird’s-eye view of where your orders are and their current status.

Start your automated dropshipping business with Shopify