Executive Briefings

Utilizing Drop Shipping Industry for U.K. Retail Sector

Businesses operating in the retail sector should consider drop-shipping as a part of their supply chain and multichannel strategy this year.

Online retail is at an all-time high, and forecast to grow further.  The Centre for Retail Research (CRR) recently predicted that 21.5 percent of all U.K. sales will be online by 2018. In this increasingly competitive environment, responsiveness to customer demand is crucial as customers seek efficient delivery and low prices.

The act of drop-shipping, whereby stock is delivered direct to the consumer from the manufacturer or wholesaler rather than from the store, is becoming a progressively popular solution to the dual challenges of efficient stock management and customer delivery preferences. The technique is becoming common practice due to the cost savings and shortened delivery time provided. By cutting out middleman distribution centres, retailers can achieve significant reductions in their handling and storage costs, but more importantly it can help to meet the increasing consumer expectations on delivery to suit their individual preferences.

However, before adopting drop-shipping, there are challenges with the process that need to be thought through, the main one being visibility.  Customers expect a retailer to know when their product has been shipped, where it is in transit and when delivery will take place.  Without this information, the customer will consider customer service to be unacceptable.

Also, there may be times when sales volumes are high (such as Christmas and other seasonal times) when packages are at an increased risk of being improperly labeled, incorrectly routed or even lost. How these situations are handled matter greatly.

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Online retail is at an all-time high, and forecast to grow further.  The Centre for Retail Research (CRR) recently predicted that 21.5 percent of all U.K. sales will be online by 2018. In this increasingly competitive environment, responsiveness to customer demand is crucial as customers seek efficient delivery and low prices.

The act of drop-shipping, whereby stock is delivered direct to the consumer from the manufacturer or wholesaler rather than from the store, is becoming a progressively popular solution to the dual challenges of efficient stock management and customer delivery preferences. The technique is becoming common practice due to the cost savings and shortened delivery time provided. By cutting out middleman distribution centres, retailers can achieve significant reductions in their handling and storage costs, but more importantly it can help to meet the increasing consumer expectations on delivery to suit their individual preferences.

However, before adopting drop-shipping, there are challenges with the process that need to be thought through, the main one being visibility.  Customers expect a retailer to know when their product has been shipped, where it is in transit and when delivery will take place.  Without this information, the customer will consider customer service to be unacceptable.

Also, there may be times when sales volumes are high (such as Christmas and other seasonal times) when packages are at an increased risk of being improperly labeled, incorrectly routed or even lost. How these situations are handled matter greatly.

Read Full Article