Drop Shipping in 2017 – Opportunities and Turbulence for Retailers

Drop shipping in 2017: Is drop shipping the ‘holy grail’ for struggling Bricks Mortar retailers? Or is it a retail business model that goes against what online customers demand: An easy, consistent and seamless experience.

According to Joel Padi writing in The Market Mogal, the young people in the UK choose increasingly to become entrepreneurs. This is because of the unpredictable economy, high study fees and a fiercely competitive job market. Joel says that some of the young entrepreneurs consider drop shipping as a “risk-free, low start-up cost, and profitable business venture”.

Josh Wexler, CEO and Founder of RevCascade, posting in the MULTICHANNELMERCHANT says that “Thanks to its inherent flexibility and low-risk nature, drop shipping has the potential to be your ultimate tool for merchandising and product curation”. However, Ed Kennedy cautions that with drop shipping, a retailer may put his/her good reputation in another’s hands. A real concern…

The drop shipping in 2017 will be discussed – does it offers opportunities for retailers, or is it too troublesome?

The drop shipping distribution model

The drop shipping distribution model is usually contrasted with the traditional retail distribution model. Comparing the two models is not without a good reason. Traditional retail distribution models require the retailer to buy inventory, and to store and manage it. This practice needs a monetary investment that serves as an important entry barrier to the industry.

There is no need for a retailer to buy inventory, or to handle it when using drop shipping.  Since the capital requirements starting a drop ship retail business is small, the barrier to enter the industry is low. Therefore, starting a drop ship business seems easy, but how easy is it to keep it open?

The pros and cons of drop shipping in 2017

Drop shipping, as with any other retail business model, has its advantages and disadvantages:

The advantages of using drop shipping for existing retailers are according to Josh Wexler as follows:

  • Increasing volume with existing brands – launching a drop ship program largely takes the responsibility of shipping and fulfillment off your shoulders;
  • Selling new products from new (and existing) brands – your product mix and brand offerings can be drastically expanded and diversified with virtually no risk;
  • Testing new verticals – drop shipping can mitigate risk to the point where retailers can test out merchandising with entirely new verticals, not just products and brands;

The disadvantages for retailers using a drop shipping system are according to Strategy Plus:

  • Processing your orders can become difficult. The time between selling a product and getting it shipped can take long. Also, there are many conversations and actions that need to take place before it gets sent off;
  • Not having all of the product information is problematic. As you never actually handle the products that you are selling, you have no realistic idea of what they are like;
  • Customer service issues. Drop shipping removes the responsibility of shipping but, sadly, it also removes a large part of the customer experience from your control;
  • A vast amount of competition is everywhere. Finding great drop shipping products means they generally will come with competition from other retailers in your sector.

How should retailers practice drop shipping in 2017

In a time where many Bricks and Mortar retailers are closing shops because changes in the buying behaviour of their customers, a drop shipping distribution model may provide an outcome. Indeed, drop shipping has the power to build a retailer’s eCommerce site and increase product offerings with little capital investment.

However, Peter Zaballos, Chief Marketing Officer at SPS (quoted in the MULTICHANNELMERCHANT) suggests that before retailers decide to add drop shipping capabilities, they should consider the following six questions:

  1. Do I have the infrastructure needed to support it? Drop shipping involves many moving parts and requires flawless orchestration between retailers and suppliers. Communication, collaboration and efficiency are key to meeting the promise made to consumers.
  2. Do I have the right internal resources in place? Managing the increased document flow drop shipping requires may tax your internal teams. It’s critical that you have systems and processes that can support increased volume.
  3. Which of my suppliers have drop shipping capabilities? While having a relationship with a supplier that offers drop shipping makes it easier to add this component to your merchandising strategy, it is not a necessity.
  4. How will I receive reliable, accurate product information? Today’s digital consumers rely on detailed product information when making purchasing decisions. To ensure you provide such information, gather item attributes from your suppliers.
  5. How will I maintain service levels? Drop ship agreements require collaboration and trust in order to ensure customer expectations are met. From the start, foster and encourage open dialogue and set expectations, requirements and goals.
  6. In what way will I manage returns? Even with accurate product information and a good shopping experience, returns are inevitable and must be planned for. First, determine what to do with merchandise that is returned. Will it go back to the warehouse or the supplier, be discounted and sent to store shelves or sold elsewhere?

Concluding

Although the start-up costs are low with a drop shipping business, it’s not so easy to run it. Websites such as Dropship.com and Shopify as well as other applications run by the wholesale suppliers will mostly give entrepreneurs a seamless start. However, what happens there after will require all the ‘guts’ and determination to keep going.

Then there is the ‘the paradox of choice’. Jeremy Hanks, CEO of Dsco said recently in Practical Ecommerce that “customers overwhelmed by product variety end up just window shopping.” Joel Padi writing in The Market Mogal advises that when starting with drop shipping, specialization in a niche market could prove to be the key to a profitable start-up. By reducing their focus, first-time entrepreneurs can narrow the target market, reducing advertising and marketing costs.

Finally, to do successful drop shipping in 2017, the retailer must maintain control over the entire customer experience, including how transactions and communications take place, says Adrien Nussenbaum, co-founder of Mirakl (Internet Retailing).

Image: Pixabay

Read also:  Drop shipping retail in 2016

 

 

22 thoughts on “Drop Shipping in 2017 – Opportunities and Turbulence for Retailers

  1. Kelly

    I’ve been exploring for a bit for any high quality articles or blog posts
    on this kind of area . Exploring in Yahoo I at last stumbled upon this website.
    Reading this information So i am happy to convey that I have an incredibly excellent uncanny feeling I discovered exactly what
    I needed. I most no doubt will make sure to don?t disregard this site and provides
    it a look on a constant basis.

  2. Rochell

    Superb blog! Do you have any helpful hints for aspiring writers?

    I’m hoping to start my own website soon but I’m a
    little lost on everything. Would you recommend
    starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m completely confused ..
    Any tips? Thanks!

  3. Herbert

    I was curious if you ever considered changing the structure
    of your site? Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people could connect with it
    better. Youve got an awful lot of text for only having one or 2 pictures.
    Maybe you could space it out better?

  4. Lynn

    I just couldn’t depart your website prior to suggesting that I really
    enjoyed the usual info an individual provide in your guests?
    Is gonna be back regularly to check out new posts

  5. best tips for selling your home

    Thank you, I’ve just been searching for info approximately this topic
    for a long time and yours is the greatest I have found out
    so far. However, what concerning the conclusion?
    Are you positive in regards to the source?

  6. fifa 18 tips para exponer

    This is the right website for anyone who really wants to understand this topic.
    You know so much its almost hard to argue with you (not that I actually will need to…HaHa).
    You definitely put a brand new spin on a subject that has been discussed for many years.
    Great stuff, just excellent!

  7. Wesley

    Howdy just wanted to give you a quick heads up. The words in your
    article seem to be running off the screen in Ie. I’m not sure if this
    is a formatting issue or something to do with internet browser compatibility but I thought I’d
    post to let you know. The layout look great though! Hope you get the issue resolved soon. Many thanks

  8. Milford

    Greetings I am so excited I found your site, I really found
    you by accident, while I was searching on Askjeeve for something else, Regardless
    I am here now and would just like to say cheers for a fantastic post and a all round exciting
    blog (I also love the theme/design), I don’t have time to browse it all at
    the minute but I have bookmarked it and also
    included your RSS feeds, so when I have time I will be back to read a lot more, Please do keep up the excellent b.

  9. Sasha

    I simply could not go away your website before suggesting that I really loved the standard information an individual supply on your visitors?
    Is gonna be again ceaselessly to check up on new
    posts

  10. Brigida

    I was curious if you ever considered changing the page layout of your site?

    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people could connect with it better.
    Youve got an awful lot of text for only having 1 or 2 pictures.

    Maybe you could space it out better?

  11. Kelly

    For latest information you have to pay a visit web and on world-wide-web
    I found this website as a most excellent web site for newest updates.

  12. aapan.org

    At this time it seems like Expression Engine is the preferred blogging platform out
    there right now. (from what I’ve read) Is that what you’re using on your blog?

  13. Kasha

    Genuinely no matter if someone doesn’t know after that its up to other
    visitors that they will assist, so here it occurs.

  14. Cherie

    Undeniably believe that which you said. Your favorite reason seemed to be
    on the internet the easiest thing to be aware of.
    I say to you, I certainly get annoyed while people think about worries that they plainly do not know about.

    You managed to hit the nail upon the top and also defined out
    the whole thing without having side effect , people could take a signal.

    Will probably be back to get more. Thanks

Comments are closed.