Top four golden benefits of dropship

With the inexorable rise of e-commerce, consumers have become increasingly discerning and demanding. The key battle grounds for retailers have become focused around product choice, convenience and speed. Whilst almost all retailers recognise the urgency to improve their multichannel offerings, only a few are effectively delivering. Most retailers, in trying to make the online shift, find themselves hampered by outdated and turgid systems which are hindering their ability to keep up with the competition.

The effects of those struggling are all too evident with a recent PWC report finding that almost 2,500 shops were lost from the top 500 high streets in 2018, a 40% increase on 2017 and 10,000 high street stores are expected to shut this year according to the Centre for Retail Research. We have also witnessed the demise of major brands including Toys R Us, House of Fraser, Maplin and Evans Cycles, and only this week Debenhams collapsed into administration.

Dropship is an often misunderstood and overlooked solution, but retailers could be generating 30-50% of their online sales through a risk-free dropship operation. It allows retailers to increase ranges and grow sales without the need to hold the stock in inventory; it is instead distributed direct from the supplier, thereby improving working capital and reducing the costs associated with stockholding and shifting bulky, slow-moving items.

By working with dropship suppliers to provide extended product ranges, retailers can reclaim market share in their core and peripheral ranges from e-commerce giants who are able to add thousands of products to their platforms with ease each day.

In reality, a modern dropship strategy touches many more aspects of a retailer’s operations and its benefits are manifold. This article explores the top four golden benefits of dropship.

Enhances core ranges and extends online offering

The key benefit for many retailers is the attractive scale opportunity; enhancing and extending core specialist ranges as well as being able to move into and offer complimentary ranges if their customers demand those products. This is something the likes of Amazon do with ease and as a result, traditional retailers have lost customers who want that wider range of core products plus the ancillary and complementary products.

Increases speed to market

Dropship also enables retailers to increase their speed to market. New products need to be uploaded rapidly in order to keep up with new trends. Some legacy systems mean that setting up a new product for sale can take up to 20 weeks, with delays drawn out by numerous forms which are filled out and processes between the supplier and the retailer. The lag in setting up new products can lead to an unacceptable customer offering, impacting sales. Through dropship, retailers can ensure that they are keeping up to speed with ever changing product ranges and can react quickly to evolving trends through a seamless process.

Ensures a better customer experience

Retailers can also guarantee a better customer experience using dropship. A slick dropship operation provides greater control over both the customer and order journeys. A joined-up solution should provide the retailer with sufficient tools through which to present the customer with a seamless and identical customer journey, as if the product was coming from its own stockroom.

This increased visibility over both orders and inventory also provides opportunities to deal with customer queries in a more efficient way. Retailers are inundated with customer calls regarding the whereabouts of their product (WISMO or ‘Where is my order?’ calls). These can represent 60-70% of all telephone traffic and place huge demands on call centre infrastructure. Dropship provides much better mechanisms for consumers to receive real-time updates on the status and location of their order, vastly reducing the call traffic and need for man-power.

Increases a retailer’s efficiency

Dropship can also drive a raft of efficiencies, particularly if the platform offers a comprehensive view of inventory. Not only does it allow buyers to grade and rate suppliers more effectively, it can also facilitate a much more efficient returns system. Dropship provides retailers with enhanced control over product life cycles. Through dropship, retailers can utilise supplier information, ensure that communication to consumers remains consistent and add products, suppliers and orders without using people in the process. Through a joined-up approach, retailers can maintain control and guarantee a frictionless customer experience.

Retail is in the midst of a monumental shift towards ecommerce. Those retailers who can offer a unique, specialist proposition which provides something different to the customer, needn’t sit back and watch their market share erode. Dropship provides that mechanism through which to efficiently stay in the game by capturing new sales, reclaim market share from the online behemoths and ecommerce giants, reduce cost and remain relevant. For many retailers, that journey is only just underway.

Ed Bradley, Co-Founder and CEO of Virtualstock

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