In the last 12 months, the unprecedented rise in ecommerce sales saw many retailers turn to dropship. But what is next for dropship in an age of increasing click-and-collect? Virtualstock founder Ed Bradley explains all
The massive growth in ecommerce over the last year has solidified online as the primary destination for many customers. It has also seen retail brands invest in and upgrade their technology solutions to better deliver a joined-up customer experience.
In this regard, the retail battlefield has changed. Online shopping has never been used so frequently and so easily by so many and this has seen expectations around product availability leap to new levels. Customers have grown used to the broad ranges showcased on online channels and increasingly expect the same choice, however they choose to shop.
The method that many retail businesses have turned to for fast range expansion is dropship. Dropship involves working with a network of suppliers for different products, so stock sits in their warehouses rather than a retailer’s own. However, products are showcased on a website in the usual way, so retailers are able to achieve sales without the need to tie up as much capital. Put simply, dropship is a great way to reach new audiences, pivot into new categories, grow market share and test new markets.
It is a common misconception that dropship is the preserve of the likes of Amazon and eBay, but it is also used extensively outside of these “open” marketplaces. As online offerings have grown over recent years, so too have the number of retailers utilising the dropship approach, even if their consumers are unaware of it.
The next challenge for the deployment of dropship is how it works as part of a physical store network. Now that non-essential stores are open again, many bricks-and-mortar outlets are being used as click-and-collect destinations.
However, logistical headaches emerge when allowing customers to collect products purchased through dropship channels at a store of their choosing. The traditional delivery of products from a retailer’s own storage facilities to its own stores is a linear process and can usually be handled by a sole logistics supplier. Click-and-collect items are treated no differently from stock replenishment and can arrive at stores relatively simply.
When there are multiple different suppliers, it’s a different proposition altogether: much more consideration needs to be given to getting items from A to B. Without adequate ways to manage a dropship network, retailers could be left in a situation where individual items are delivered at unscheduled and unpredictable times. This would not just be a logistical nightmare but for many stores (and customers) it would be completely unfeasible.
Retailers therefore need processes and protocols in place that are fit for the omnichannel age. With dropship and click-and-collect both set to continue long after lockdown restrictions have lifted, here are three ‘golden rules’ to maximise the power of both approaches.
1: Consider dropship a strategic move rather than a tactical one
The term ‘dropship’ is often conflated with an easy way to lower prices, but it should be seen primarily as a way to extend product ranges and grow revenue. As such, it should be considered a strategic move by retailers and given due prominence at a senior level within the organisation. Only then can appropriate consideration be given to the fulfilment side.
2: Don’t underestimate the importance of technology
As retailers upweight their supplier and product numbers, the ability of legacy tech systems to give visibility over where all stock is located comes under strain. Software like our own The Edge not only allows retailers to efficiently coordinate delivery of multiple products, but also provides much needed supply chain visibility via regular updates on orders. The retailer therefore knows where each order is so can make accurate availability information is available to consumers.
3: Plan for returns and other contingencies
Even the best laid plans sometimes have hiccups. Retailers must always have contingency plans in place in case orders are late and must have a well-oiled, intuitive returns service. Just as click-and-collect offers a way to bring online shoppers in-store, so too can a returns drop-off point present an opportunity for further in-store engagement with the customer.