As the annual live chick ordering frenzy ramps up into full gear during the spring months, you may have seen what is sometimes considered a dirty word/term in the backyard chickens and hatchery world – “drop shipping”.
What is drop shipping when it comes to live chickens, ducks, geese, game birds, etc.?
The term “drop ship” means to move goods to a customer directly from the manufacturer, without using typical distribution channels. Typical distribution channels usually include a regional distributor, and/or a brick and mortar retailer. Basically, dropshipping means that the manufacturer is sending goods directly to a customer, on behalf of a sales agent or retailer (who is considered the drop shipper).
Okay…but what does that mean for my order of chicks this Spring?
If you are placing your annual order of for chicks, ducks, goslings, game birds, guinea fowl, or really anything that originates at a hatchery, there is a decent chance that your order is being drop shipped. This means that you may have ordered from one company/website/catalog, but your order is actually going to be hatched and shipped by another hatchery – and you won’t really know the difference.
That means that you may be ordering from a site like CaliforniasBestChickens.com (which is fictional, I’m not going to name any brands or companies in this article), and that website is actually dropshipping the order from a hatchery halfway across the country in a place like Iowa or Texas. On the package, the return address is from the CaliforniasBestChickens.com, where you ordered from, but if you look at the postmarked zip code, it could be from a completely different state. Even hatcheries themselves sometimes will increase their sales capacity by drop shipping with other hatchery.
Is drop shipping a bad thing?
Not at all, but it should just be something that you are aware of when you are placing an order for something as sensitive as live baby chicks. Drop shipping is relatively standard in the world of ecommerce, as it often doesn’t make sense to move inventory from one place to another, just to have it ultimately shipped again to the end customer. Drop shipping is actually critical for this space of heritage breed and pasture raised poultry, as there are only dozen or so hatcheries in the US that produce and sell the breeds at a commercial scale which backyard chicken enthusiasts and pasture raised poultry farmers are fond of (breeds like Easter Eggers or Silkies).
Drop shipping is how this industry has been able to succeed and grow, and become a part of the American agricultural fabric. The 1947 Sears catalog used to even dropship chickens, it is an example supply chain innovation creating a competitive advantage.
Why is drop shipping a critical practice for the heritage breed poultry space? Why don’t farms and hatcheries just sell all their products directly to customers?
There are a few key reasons why drop shipping is actually a very necessary practice for the industry of pasture-raised and heritage breed poultry. Farms and hatcheries would struggle to sell all of their products directly to customers. Also, customers would ultimately have a more difficult time making the purchases they want if they only were able to purchase from a hatchery’s retail channel. Some reasons for this are below –
- Demand seasonality creates challenges in heritage poultry. – The demand for live poultry is very high during the second and third quarters of the year (March through September), and relatively low during the other parts of the year. Hatcheries have a real challenge in staffing up sales and customer service capacity (not to mention everything else that goes into running a hatchery) during the busy times of the year, only needing to offload that sales and service capacity during the cooler months. This creates a tremendous operational difficulty for hatcheries that drop shippers can greatly alleviate. Hatcheries can capture demand without having to invest in the infrastructure, by working with drop shippers.
- Customers may have difficulty in locating available breeds and transacting with the farm/hatchery. Live chickens and other types of poultry present a challenge for customers to actually find and transact with the farms and hatcheries producing the heritage breeds they’re looking for. Customers experience difficulty in finding availability in a reasonable timeframe, as order get booked out with popular hatcheries far in advance. The inventory in heritage poultry is extremely time sensitive and must be sold well in advance of the hatch date. Furthermore, some of the smaller farms and hatcheries may have difficulties in fulfilling the orders smoothly. Combine this with the customer difficulty of finding some rarer breeds, or the fact that many of the top small-scale farms and breeders do not have sophisticated ecommerce or marketing capabilities, and you are left with the reality that customers and producers find it difficult to come together. Thus, drop shippers act as brokers, bringing together buyers and sellers who may not otherwise connect. In short, drop shippers bridge some of the operational gaps between producers and customers.
- The customer service workloads and sales support demands are huge in this space. – Live poultry is a very high touch sales/fulfillment process. When eFowl acted as a drop shipper/retailer, we saw approximately ten times the amount of inbound customer service touches compared to similar ecommerce (outside of poultry) in revenue business. Thus, when that customer service workload is placed solely on the hatchery or producer, it can be difficult to manage. Likewise, hatcheries are extremely good at their crafts of producing quality heritage breed poultry, and delivering it to the customer (no small feat, believe me). Hatcheries are not going to have as much time or resources to devote to building customer service and sales support systems. Thus, a drop shipper is in a better place to focus on making the customer experience superior, while the hatchery focuses on the best possible production standards. For example, at eFowl, we built out a helpdesk system, and shipment notification/confirmation systems that automatically kept the customer in the know, so that the hatcheries we worked with could focus on hatching and shipping.
All in all, a drop shipper can fill the gaps that exist between customers and producers, to allow the heritage breed and pasture raised poultry industry to thrive.
What are some of the drawbacks if I place my poultry order through a drop shipper, rather than directly with a hatchery?
There are some key things to keep in mind of if you are ordering from a drop shipping website or catalog, rather than directly from a hatchery/farm –
- You are likely paying a higher price. – A company/website/retailer that is drop shipping is ultimately its own business and needs to make money somewhere. While the larger hatcheries will usually offer a discount (or a wholesale/drop shipper price) to the retailer, this generally is not enough on its own for the business. For example, a dropshipper may be able to negotiate a 10% price discount from a hatchery’s retail price, but will likely need to charge the customer about 20-30% more than the hatchery’s own retail price to have a thriving business.
- Hatcheries may prioritize their own customers over the customers of a drop shipper, which may result in a worse experience for you. – This truth is a difficult one to accurately write about because ultimately the space of heritage breed and pasture raised poultry is very ethical and responsible. However, there are certain risks that hatcheries will use drop shippers as somewhat of a pressure release valve when the inevitable fulfillment difficulties arise. Thus, the customers of a drop shipper may not receive the same quality or level of service than if they were to order directly with a hatchery. While I believe this is much rarer than you may suspect, it is human nature that it will happen in certain cases. Ultimately, a farm or hatchery is going to care about their own brand more than the brand of a retailer of drop shipper. Please note, almost all of the people I have come across in this heritage breed poultry space over my 10+ years of being a part of it have been shining examples of the agrarian ideal; they are trustworthy and scrupulous in every possible way. However, bad actors do exist.
- Dropshippers may not be transparent about what they are selling, resulting in an obfuscated source for live poultry. – Again, this is not at all a widespread issue. However, drop shippers ultimately want to conceal their own sources, so customers can’t simply go directly to them, allowing them to stay in business. Thus, some catalogs and drop shippers will list hundreds and hundreds of breeds, and it will look like they have some magical hatchery producing everything you could possibly ever want. For the customer, this may result in your belief your birds are coming from one place when they are actually being hatched at a totally different location and produced by an entirely different company. That company may have different biosecurity and production standards, that are not accurately represented by the drop shipper. Drop shippers may not need to advertise the exact origin of their birds, but they should at least be honest if customers ask.
What are some of the advantages of ordering through a drop shipper?
Conversely, many customers prefer to work with drop shippers rather than directly with a farm or a hatchery. It is not that the wool has been pulled over the customer’s eyes. Rather, they recognize some of the benefits and reliable consistencies that they would not otherwise have if they were to work directly with a producer, including –
- Drop shippers may offer reliable standards of customer service, regardless of the farm or hatchery producing the poultry. A drop shipper will need to work with a wide variety of farms, hatcheries, and equipment manufacturers to offer the customers comprehensive catalog. The onus is on the drop shipper to develop fulfillment and service standards with that producer. Thus, a customer can order from a wide variety of producers, and expect the same level of service from a drop shipper, regardless of the originating farm or hatchery. In an industry with as much unpredictableness and volatility as poultry, most of which is outside of any one party’s specific control, the drop shipper can help offer a customer a more reliable and consistent experience. This can be incredibly valuable, especially for the customers that are small business owner’s themselves.
- There are promotions and price breaks that may be better than what a customer can get directly with a supplier. – Any drop shipper will want to offer coupons, deals, and promotions to encourage sales. This means that the dropshipper can often create valuable incentives for a customer that they may not be able to otherwise find with a vendor. Examples of such promotions include free shipping, bulk or quantity discounts, and coupons to a drop shipper’s catalog that can effectively create a discount with any supplier that drop shipper works with. All in all, this helps create a loyalty between the customer and drop shipper, which hatcheries and farms may not be able to offer directly to customers.
- Drop shippers can offer sensible guarantees and problem resolution that puts the customer first. In the live poultry space, unfortunate issues such as losses in shipment or delayed hatch dates can and do happen. It is really outside of everyone’s control. However, when you are working with a reputable drop shipper, ultimately their brand value is on the customer experience, and they will be flexible to resolve issues in a suitable way for the customer. Not to say that hatcheries don’t do this, but a drop shipper has somewhat of a heightened sense of responsibility for the customer experience as their service’s value relies on filling the gaps between the producer and the supplier.
Full Disclosure: eFowl was a dropshipper through 2016.
eFowl was a major retailer of live poultry, supplies, and equipment for several years leading up to 2016. We would process and service approximately 12k orders every year, connecting customers with suppliers. Ultimately, we geared are service around effciency, allowing customers to have the best possible experience, and suppliers to be able to succeed in their business given the challenges of marketing and fulfillment in the pasture-raised and heritage breed poultry space.
In 2016, we announced that we would make it absolutely clear to a customer before they ordered where their order was coming from (in the interest of full transparency and accountability). This was well received by our customers, who were loyal to the eFowl experience even if it meant they could get better prices by purchasing directly from the source.
Then, in 2017, we transitioned to a full marketplace model. This is a model where we do not sell any products at all, but rather allow the various farms and hatcheries to list their catalogs on eFowl, and interested customers are taken to the producer to purchase directly through them. We charge the producer a small commission for the successful sales. Ultimately at eFowl, we seek to innovate the pasture-raised and heritage breed poultry space using technology, such that all parties succeed.
Is this helpful?
Obviously, we have a unique insight into the way the pasture-raised and heritage breed poultry space operates given our unique history as a drop shipper. If this is helpful, let us know in the comments and we will continue to produce industry insider guides and articles that help remove some of the confusion and obfuscation that exists in the space.