How Dropshipping Can Help Move Inventory for Brands and Reduce Risk for Retailers Right Now
Many brands are looking for new ways to sell their goods, exploring DTC channels and expanding their retail network. With dropshipping, brands can build on their existing partnerships and utilize inventory wherever it is stored, which can resolve issues of stockpiling and supply chain disruption.
The current retail environment has placed a strain on many footwear businesses and the relationship between vendor and merchant, as some orders are canceled and others can’t be fulfilled. But the recent growth in consumer spending suggests that there is an opportunity for companies to profit — if they are able to adapt to the new circumstances and find a compromise that works for both retailer and brand.
“Retailers are trying to free up cash flow and inventory risk, while also having to constantly refresh collections and assortments to attract consumers and stay relevant,” said Roy Avidor, CEO at dropshipping platform Cymbio. “Brands need to enhance their digital sales channels due to brick-and-mortar’s slower performance.”
Dropshipping reduces the risk for retailers by removing the need to purchase a set amount of inventory upfront. And rather than store the merchandise themselves, retailers have their orders fulfilled directly by the brand or a third-party logistics provider. This enables them to trial new products or expand the number of SKUs available on their site, as they only need to pay for the items they sell (usually at a higher margin.)
For brands, this creates an appealing dynamic to attract new partners and also earn higher profits. Brands can utilize their inventory across brick-and-mortar stores, warehouses and distribution centers, which can optimize shipping times and also ensure that no stock is wasted. The reduced shipping is also a way to cut down on both costs and carbon footprint, which is particularly valuable as consumers look to support socially conscious brands.
However, there are challenges in creating a scalable dropshipping process. Different brands and retailers use different management software, requiring a system that can integrate with all of these platforms. Inventory data needs to be updated in real-time, to ensure that all partners can fulfil their orders and provide a consistent standard of service.
“The devil is in the details and, in this case, doing this yourself means you’ll need to create custom integration with each retailer,” said Avidor. “In most cases, you’ll need to have some (or most) processes done manually. This can work for a few orders a day, but can’t be managed at scale — but today’s consumer is rightfully demanding superb service.”
Platforms like Cymbio can simplify this protocol by providing the technological infrastructure to fulfill these numerous partnerships. SMBs may particularly benefit from enlisting a company to manage each element of dropshipping, from setting up each retailer to managing daily operations and overseeing billing, cancellations and returns. By engaging with a third party, brands can also be exposed to a range of new potential retailers that are already set up within the system for easy onboarding.
“With brick-and-mortar being closed on and off for the foreseeable future, brands are looking to establish a wider online presence,” said Avidor. “Having your own e-commerce site is one thing; however, you need to be where your consumers are. Cymbio is seeing exponential growth, as dropshipping and marketplaces are becoming more and more significant in brands’ and retailers’ revenue streams.”
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