It’s not a surprise that all retailers – even the ones that clung forever to the brick-and-mortar model – want a piece of the e-commerce pie. E-commerce and vendor drop ship fulfillment have radically reconfigured consumer shopping. In this newfound retail reality, repeat business is not desirable – it’s critical for survival. Revenue growth is unlikely to occur in a physical, not exclusively, at least, but online. Yet, for most retailers, expanding e-commerce revenue is a critical business challenge today.
What did Amazon get right that made the e-retailer so popular so quickly? At its core, Amazon essentially gave buyers an alternative to the frustrations of the frequently understocked local bookstore. Instead, they built a warehouse with millions of books, so customers could get any title. From there, they built a network of manufacturers and suppliers across a myriad of industries that could both store and ship product. In 2018, there’s almost nothing you can’t order from their website.
To survive and succeed, retailers must expand their ecommerce revenue. However, replicating Amazon’s success will prove difficult, if not impossible.
Here are the key challenges retailers face as they look to expand ecommerce revenue, along with some tried-and-true recommendations of how to overcome them.
1. Their Warehouses, Your Reputation
Let’s say a customer orders an item from a dropship vendor from your ecommerce website. You are responsible for all elements of that transaction. Should your website offer two-day shipping (which is nearly a necessity these days), you are on the hook to satisfy that growing customer demand. The only way to know if items are shipped in a timely fashion is to monitor them – which is where supply chain integration platforms come into play (see dropship provider checklist and comparison tool).
2. Dealing with and Onboarding New Vendors on Short Notice
This is a frequent issue as retailers look to expand ecommerce. When a product becomes a hot-ticket item, you will need to stock it online, preferably before demand spikes. But you might not know at the outset if the vendor has the capability to drop ship items in a timely manner. To ascertain a predictable outcome, you need to outline specific vendor KPIs and establish a real-time dashboard to include:
1. A unified view of vendor shipments to distribution center, store & direct-to-consumer
2. Visibility into product catalogs, digital assets and product information
3. Visibility and score-carding of how dropship vendors are performing
3. A New Type Of Competition
This is a constant in any business, but magnified in the ecommerce world. Trying to sell and offer everything probably isn’t going to work since the retail giants corner that market. A curated merchandise mix or private label brands ( and the ability to integrate them) are two ways to overcome the giants who have huge supplier networks and can stock anything.
4. Little To No Ramp-up Time for Dropship Enablement
In today’s ultra-competitive and rapidly evolving marketplace, retailers can simply not afford to take it slowly. They must move quickly or face certain store closures or bankruptcy.
Yet, the need to accommodate more complex transactions and relationships with little to no ramp-up time is one of the key challenge for most retailers. A regular report card on your drop vendor community performance is a given necessity to enable a predicable supply chain outcome.
However, to ensure repeat business that keep e-commerce revenue humming, retailers need seamless integration into the ERP or back-office system, e-commerce platforms, and small parcel and LTL carrier integration. Any potential for supply chain exceptions must be prevented, and real-time alerting and quarantining of supply chain rule violations must be implemented at the outset development of the dropship program.
5. Over-Complicated Vendor Requirements
Overwhelming dropship suppliers and vendors will hurt your e-commerce expansion efforts. Be clear with them at the outset about your expectations and treat them as a trading partner – not simply a supplier – is more critical than ever in the ecommerce supply chain. The vendors’ ERP system does not need to mirror yours (though you’ll need integration capabilities, as mentioned above).
In our next article, we’ll explore how to develop a dropship program to support online order fulfillment and expansion of SKUs. In the meantime, download the dropship self-evaluation form to assess your current dropship capabilities. Should your organization choose to outsource these critical functions, download the dropship provider checklist and comparison tool to find the dropship provider that best meets your organizational needs.
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