Drop-Shipping Channels vs. Your Own eCommerce Online Store: From a Fulfillment Perspective | For brands that manufacture or carry their own inventory (versus drop-shipping directly from a manufacturer/supplier), running a successful and scalable online eCommerce business is no easy task in today’s competitive landscape. Gaining the attention, interest, trust and loyalty of customers requires both marketing and operational expertise. As you look to successfully grow your brand, there is much to think about as it pertains to order management and fulfillment operations. Finding your way to the customer and generating sales is of course objective #1. Brands often choose to create and manage their own shopping cart, which allows complete control of the customer experience while maximizing their margins with each sale. Brands may also choose to sacrifice some margin by utilizing online marketplaces where high traffic already exists, cutting down on marketing expenses. There are pros and cons with both approaches that a brand must consider when choosing their online marketing strategy, and when all is said and done, in business, these decisions all boil down to the financial implications:
- The cost to acquire a sale (marketing expense)
- The financial benefits of acquiring and controlling the customer contact data
- The margin achieved with each sale
- The positive or negative implications of the overall online buying experience (repeat customer business)
- The importance of building your own brand identity and recognition
There are many articles out there on the above topics that cover the high-level pros and cons of selling through online marketplaces versus a brand’s own shopping cart, but not a lot is being written about when it comes to the implications with order management and fulfillment.
From a fulfillment perspective, brand-managed shopping carts are fairly straightforward with respect to order management, data flow and fulfillment execution on the floor. Drop shipping through online marketplaces on the other hand introduces some challenges that a fulfillment company must be prepared to help brands manage through, including:
- Inventory Thresholds requiring complex data feeds and administrative time to ensure inventory is actually available to sell by SKU within every selling channel
- Shipping can be a challenge with the requirement of using 3rd party shipping accounts that are controlled by the online marketplace (mapping by channel)
- Branded Packing Slips are required by many dropship marketplaces requiring complex mapping, and often coupled with a unique pack-out that differs from a brand’s own shopping cart
- Service Compliance where sellers may lose their selling status if order execution does occur within required parameters
- Order Aggregation, Integration and Data Flow can be a challenge when accepting orders from multiple online marketplaces (3rd party software solutions available)
- Catalog maintenance is often required by online marketplaces where sellers are required to maintain product catalogs to ensure that physical attributes, UPC’s and descriptions are up to date
Online marketplaces can be a great approach to generating sales. When choosing to go this route for some or all of your eCommerce business, it’s important to not only understand what it takes to compete in this arena from a marketing perspective but also what it takes to execute in fulfillment. Choosing a fulfillment partner that is seasoned in the world of drop ship fulfillment from online marketplaces is extremely important for brands that choose to go this direction.
This infographic was created by AMS
Fulfillment, a fulfillment management system
Author bio: Jay Catlin is CEO at AMS Fulfillment, a leading order fulfillment company servicing B2B and B2C clients nationwide. Catlin founded the company in 2002 and helped grow AMS into the successful third-party fulfillment entity it is today.