Philip Hall, Managing Director, Europe, CommerceHub
I recently had the pleasure of hosting a breakfast session at the Internet Retailing Conference, an excellent event and venue for networking with the biggest names in the UK retail industry. I shared insights from a recent CommerceHub survey of 200 online retail decision makers and workers who were asked to share their thoughts about using drop ship and marketplace models as a strategic way to cost-effectively expand product range.
Here’s a summary of key findings.
When asked about plans for increasing product range, 75% of retail decision makers confirmed that adding more products or product categories to their ecommerce channels was a top priority for the business.
On average, retailers are planning to expand their online product range by 31% in the next 12 months. 84% believe that expanding online product range will increase revenue, perhaps more notably, 67% expect it to attract more visitors to the website and thus buy into the positive knock-on effect that greater choice could have on their brand experience.
The survey found that nearly 50% of businesses are utilising drop ship and or retailer marketplaces today. 20% that don’t use drop ship today are planning to do so in the next 12 months. The practice is more widespread than perhaps we thought and on average, a third of online business is estimated to be generated through drop ship and or marketplaces today.
Better Education about Drop Ship and Marketplace Programmes is Needed
All that said, the survey findings did indicate a clear need for more awareness about the powerful benefits of adopting a drop ship and/or marketplace strategy. As many as 64% of respondents said that increasing their own warehouse capacity was more viable and attractive versus 46% who felt that drop ship or marketplaces provided a good way forward. Why is this? This question has greater poignancy when we consider that 46% valued the fast shipping and delivery capability of drop shipping and when, broadly speaking, 90% of the respondents felt that drop ship and marketplace offers a ‘same or better’ experience than their own website and stores.
Perhaps, it lies in the fact that as many as 32% respondents had concerns with maintaining a 24/7/365 sales platform with drop ship and cited their lack of internal experience as a drawback. To overcome these concerns, working closely with partners who have in-depth drop ship and marketplace expertise, like CommerceHub, who can manage the entire programme for both and provide expert support along with strategic guidance that aligns with meeting your business objectives could help dispel these reservations and help retailers enhance their customer experience by offering more choice for customers.
Key Takeaway: Retailers are seeking to achieve growth by offering a broader range of products using a combination of drop shipping, marketplaces and increasing internal warehouse capacity.
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