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?
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 Additionally, homegrown systems often aren’t as agile as partner solutions and can soon grow out of date without large, continual investment.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.
Drop shipping is not just another distribution method but an entirely different way of doing business that involves the integration of suppliers and retailers into many of the supply chain roles that are typically kept separate in wholesale. Despite its many advantages, therefore, drop shipping also has a lot of unique and complex challenges that must be navigated correctly in order to function at peak efficiency.
Check Out Our Guest Post on Shippo’s blog: Five Most Important Metrics for Monitoring Supply Partner Performance
Read the full post here.
In the coming year we’ll be adding some cool data features to the Dsco platform that will allow trading partners to not only access such data but perform just these types of correlations with their own data in real time to tackle issues such as excessive upgrades, late shipments, and cancellations.
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 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.
The problem with safety stock buffers, however, is that they represent unsold inventory. A 10 item buffer across all of a supplier’s inventory means absorbing a lot of opportunity costs to prevent cancellations
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.