Let’s face it, no retailer’s marketplace will be able to compete with Amazon (or Walmart) when it comes to general assortment size. It’s also very difficult to compete in terms of shipping costs, membership perks, and delivery speed. So what other value prop can retailers who are considering opening a marketplace offer their consumers?
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.
A lot of retail companies are wondering if they should open a marketplace. Such models offer the promise of unlimited assortment without the need for upfront investment, inventory risk, or costly trading partner integrations. Additionally, marketplaces seem to be one of the reasons why Amazon and Walmart have seen amazing growth in their ecommerce, even during the recent pandemic.
Super Bowl assortments, filled with apparel, home goods, and jewelry merchandise, are usually drop shipped because of inventory availability and other supply chain considerations. Unfortunately, a small number of retailers are dropping the drop ship ball by including products featuring the likenesses of players no longer on rosters of the Super Bowl teams. In one example, a major retailer is featuring a wall decal of a former player that has not been on the roster since 2012!
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 Power of Supply for Digital Marketing, Part One – Four Supply Woes that are Digital Acquisition Killers
If your performance marketing team isn’t pushing you for intelligent assortment and significant visibility to inventory, they are missing out on a step-change in their ability to allocate budget. Better quality differentiated assortments along with rich item data not only improve conversion rates but also have excellent value for building first-bid predictive models (more on that at a future date).
The Power of Supply for Digital Marketing, Part Two – Four Steps of Inventory Visibility to Lift EBITDA and GMV
This concept doesn’t just apply for seasonal offerings, it works for any product where demand is high and restock may have some latency. Where this is happening, having good supply partners who are 1) telling you restock timelines systematically and 2) are willing to drop ship from factories to bypass the full truck route, will make these sellout momentum playbooks smarter.
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.
As usual the sessions and panels were also top notch, with speakers from Target, Amazon, REI, and JD.com to name a few. In the coming weeks we’ll be writing a few in-depth blog posts based on some of the topics that were discussed. In the meantime, here’s an overview of important takeaways from the panels and speeches attended.
I Asked Over 200 Enterprise Brands What They Got Out of Drop Shipping–Their Answers Might Surprise You
For retailers, the benefits of drop shipping are obvious. It allows them to easily offer a wider assortment of products at retail prices while shifting much of the costs and risks associated with warehousing inventory back up the supply chain.