Finding the right retail partners to drop ship with will lay a solid foundation for the growth of your operation. Some of the ROIs you might reap include lower cancellation and return rates, lower oversell risk, lower data exchange overhead, higher volume with reasonable predictability, more inventory turns, quicker times to shipment, less tax liability, the ability to bring products to market faster, lower production and logistics costs, and hopefully, increased sales and marketshare.
A historic handshake happened on May 10, 1869 when the Union and Central Pacific Railroads joined their rails at Promontory Summit, Utah with a “Golden Spike.” My distant relative, Samuel Montague (he’s the one shaking hands, left of center in the picture above), was the chief engineer of Central Pacific, and oversaw the construction of railroad through mountains and desert, all in order to meet the Union Pacific company halfway across the continent. This event ushered in a new frontier for the American economy, all because of a compromise and willingness to share the same track gauge standards.
In short, the world is continuing to align to the consumer, and that is driving new integrated partnerships, omnichannel experiences such as BOPIS and SFS, and better technologies for seeing and selling all the inventory in a retailer’s ecosystem, whenever and wherever the consumer needs it.
Expanding your drop ship ecosystem can take a lot of time. Getting trading partners to agree to drop ship, onboarding them, and finally going live can take anywhere from several months to over a year per partner. This raises opportunity costs, hampers your ability to quickly expand assortment, and increases inventory risk when you’re forced to rely on wholesale buys to access the products you need.
Stale or inaccurate inventory data has a direct correlation with higher cancellation rates. Retailers end up selling products they don’t have, forcing suppliers to cancel orders, and leading to frustrated customers. Even a small uptick in cancellation rates can mean hundreds of thousands of upset drop ship customers, many of whom will simply go elsewhere (read: Amazon) to find what they need.
Business to consumer technology companies make it a top priority to get their customers using their product as quickly and efficiently as possible. Take Google and Amazon’s smart home technology as examples. Within minutes you can have your home device connected to your wifi network and integrated with your Google or Amazon account. Beyond that, can you imagine if it took you weeks of back and forth calling Netflix support, just to set up your account and watch the latest episode of your favorite baking show?
For EDI to die, people need to realize that the only thing holding them back from adopting new technology is themselves. For my part, I’ll be anxiously awaiting the day I can lay the last 997* document at the foot of the EDI gravestone.
Good data, good communication, and aligned incentives do more to help retail supply more perfectly than any amount of penalties and severed partnerships ever will.
Both retailers and brands need to make sure that they have the technical capabilities to handle the much higher amounts of data exchange and analysis that is required in this new data driven world. Their entire supply chain needs to be turned into an intelligent cooperative network that is able to adjust in real time to real world trends and unforeseen events.
The new year gives us an opportunity to reflect on the past and look to the future with a sense of optimism. 2017 was an exciting year to be an ecommerce professional. Amazon was in the news regularly, with no bigger story than their June acquisition of Whole Foods. Big brands like Nike ramped-up direct-to-consumer […]