Drop shipping requires that the seller-retailer use data to have a virtual representation of a physical thing that they will not see or control. Therefore, almost all retailers that embrace drop-shipped products start with one of the fundamental pieces of data: the product catalog. This is logical and necessary, as you can’t sell product without it. But it is also the step that is the most challenging and must be handled differently than the other two pieces: inventory updates and order exchange.
In-house solutions can incur a lot of overhead to build and maintain, meaning costs can quickly skyrocket past any potential savings. Additionally, homegrown systems often aren’t as agile as partner solutions and can soon grow out of date without large, continual investment. Finally, since such solutions are customized for the retailer that builds them, trading partners incur significant overhead to make their own systems compatible.
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.
Without robust omnichannel programs, retailers have less assortment, sell less of their inventory, and offer much less customer choice. All of which translates into lower growth and revenue. And yet building a scalable omnichannel program is a labyrinth of financial, technical, and multi-team challenges that can quickly turn into a money-pit with little or no growth to show for it.