Dropshipping and Scaling Up
Since the boom of ecommerce sales, more brick and mortar stores are trying to decrease their inventory and improve their bottom line; to do so, many have started dropshipping products to end consumers as an alternative.
What is Dropshipping?
Dropshipping is a business model that allows entrepreneurs to start an online business and sell products to their buyers without ever actually stocking the items themselves. Instead, when a dropshipping store sells a product, it purchases the item from a third party and has it shipped directly to the customer. If a manufacturer is willing to ship its products directly to the customer, the manufacturer is “dropshipping” on the brand’s behalf. Similarly, a retail merchant can offer dropshipping capabilities to a brand. In another scenario, a big retailer such as Walmart, Macy’s, or Target, will rely on brands to ship out products to customers, instead of using the department store’s stock.
Dropshipping can give brands more flexibility. Traditional wholesale relationships sometimes erode a brand’s bottom line and can over-complicate relationships with retailers, by forcing brands to create exclusive products or ship hundreds of items to the retailer that may not even get sold. However, by dropshipping, brands have more control over their inventory. This versatility also gives smaller companies room to experiment. For example, brands can partner with large retailers on a digital-only, dropship basis before deciding to take the plunge to ship products to brick and mortar stores.
From a retailers’ perspective, dropshipping can be cost-efficient. Instead of spending on massive amounts of inventory, retailers can avoid over-buying. This strategy was deployed well in the last year of the pandemic, when more and more physical stores had to shutter their doors. In terms of experimenting, big retailers benefit as well; they can carry a product line that they’re more uncertain about and see how well it does in the market without committing to the inventory.
Having access to multiple suppliers can be a huge advantage to the order: fulfillment ratio. If a supplier doesn’t have an item in stock, there’s a good chance another supplier will. Project Verte centralizes companies’ order management and inventory so they have all the information tracked in one place, allowing brands to make the right choices when managing their stock.
Of course, there are cons for both retailers and brands when it comes to dropshipping. If a retailer is relying on a brand to ship their own products, there is always the worry that the retailer’s unique identity will get lost and that the customer experience will be harmed, since these big-box stores will not have control over shipping times. Negatives aside, dropshipping is here to stay, so it’s important for brands to partner with a fulfillment center that knows all about its requirements and is set up with integrations to leading retailers. Partnering with the right fulfillment center, with the most up to date technology, is crucial to maintaining the supply chain relationship between a brand and their dropshipping accounts.
With Project Verte, the merchant has control over their logistics and can better optimize the supply chain, brand, and customer journey. From offering 2-day shipping to using custom branded packaging, Project Verte can help direct-to-consumer brands provide the experience their customers have come to expect. Our tools and swift product fulfillment integrate directly with e-commerce platforms and require minimal setup, providing end consumers with
a seamless front-end shopping experience and businesses a simplified back-end experience.
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