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A growing number of retailers are turning to their suppliers to drop-ship orders placed online directly to consumers, The Wall Street Journal reports.
Drop shipping provides a variety of benefits for retailers including lower inventory costs to warehouse products and having the ability to offer a greater selection of items.
The flip side of the drop shipping coin is that retailers will have reduced visibility into a supplier’s inventory than if they managed it themselves. This could mean out-of-stocks as well as issues with providing customers accurate shipping dates and delivery timeframes.
Other complications may arise for retailers turning to suppliers to drop ship online orders. This includes, the Journal reports, returns that may wind up going back to the retailer and “end up stranded at stores or retailer-run warehouses.”
There is also the matter of brand manufacturers selling directly to consumers. Having vendors fulfill orders gives them access to customer data while inadvertently making the case for cutting out the middle guy – in this case the retailer.
According to the Journal, Pier 1 Imports and Shoe Carnival have announced they will use drop shipping by suppliers as a means to expand product selection for consumers.
An RSR Research report published last year and previously reported by RetailWire projected that roughly 75 percent of retailers will take “advantage of their suppliers’ systems” to ship online orders within three years.