In both drop shipping and marketplaces, the seller does not necessarily control the product or host an inventory in a warehouse. However, there are differences between the two shipping methods.
In this blog, we will take a look at:
Which one you choose will depend on what sort of ecommerce business model you have and what experience you want the customer to have.
Both methods allow for the seller to increase the supply they can offer to the consumer.
Drop shipping allows retailers to own an ecommerce store, without actually having any products. This doesn’t mean you don’t plan to sell products; it means you don’t need to hold the inventory.
For startups and small business’, drop shipping might be a viable route to take as it can significantly reduce your outgoings in the early stages of your business.
Suppose you sell t-shirts and you’re averaging 10,000 orders a month. That’s a lot of t-shirts to store in a warehouse and organise shipping for. If you’re a start-up just getting the hang of things, this could be a process you do not need, nor manage.
In this case, a supplier would process and dispatch the t-shirt on behalf of the t-shirt company which gives you more time to focus on your business.
A marketplace is an online platform, like eBay or Amazon, where sellers can host their stores. This allows third parties to sell products alongside the marketplace’s regular inventory.
So although you may visit Amazon to buy your item, it may actually be sold to you by someone else.
If you can successfully manage the integration and partnership between your company and the suppliers who drop ship your products, then drop shipping could be a viable business option for you.
If you’re looking for a more transparent system of shipping your product then a marketplace might be for you.
Apparel and fashion industries could benefit from a marketplace due to it being easier to coordinate both the suppliers and the customers.
Making the decision comes down to deciding what experience you want your customers to have.
Retailers, especially smaller ones who are looking to drive sales could benefit from a marketplace system. Whereas retailers who are looking for a less transparent system should think about a drop shipping method.
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