Drop-Shipping. Implications for the Supply Chain

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E-Commerce > Best Practices

Diana Alexandrova, Entrepreneur, United Kingdom
The drop-shipping model in the supply chain has been quickly gaining popularity in the e-commerce field. The parties in a drop-shipping supply chain are the usual ones; customers, retailers and manufacturers. But in drop-shipping, after the online retailer receives a customer order via its website, the manufacturer undertakes the task of delivery to the customer site. In other words, manufacturers (the suppliers) are responsible not only for production, storage, packaging but also for delivery, while the retailers just need to concentrate on marketing. Advantages of drop-shipping for retailers:
  1. COST SAVINGS: Inventory pooling and scale economies effect the retailer does not need to keep any inventory and goods in stock which improves cash flow and cost of capital.
  2. VARIETY: Retailers can increase the categories and variety of products for sale on their website.
  3. DIVERSIFICATION: An opportunity for diversification - the retailer is able to apply this (...) Read more? Sign up for free

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