Retail Resources

How Dropship is Changing the Inventory & Merchandising Game

Jun 01, 2015 — Beth Wanner
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Many large retailers are competing on delivery options and satisfying consumer demands for a true omnichannel experience with seamless convenience and vast product selection. With iQmetrix Dropship, retailers of all sizes are now able to offer similar benefits to consumers.

Drop shipping is a fulfillment model that allows retailers to source products from an alternative store or warehouse, or buy products from a wholesaler and ship them to the store or directly to the customer.

At iQmetrix, we’re excited about the opportunities drop-ship programs are creating for our clients. I recently discussed these opportunities with an executive with one of our iQmetrix Dropship partners, Justin Drage, Vice President of Business Development at VoiceComm. 

How do you see Dropship changing the game when it comes to:

Shipping times?

The biggest thing as a distributor is Dropship allows us to hit more touch points – same for retailers. Retailers are able to meet customers’ needs by having what they want. With Amazon and Walmart, if a product is unavailable in-store, we’ve seen that people are generally willing to wait a few days to get exactly what they want as long as it’s still convenient.  

Cost?

The cost-benefit analysis really plays out in the retailer’s favor along with the desire to serve what’s in the best interest of their customer. - Justin Drage

The discussion around cost has been interesting in the evolution of the pitches we’ve done to retailers. We’ve found there hasn’t been much pushback over the concern for margins – retailers are able to see this balanced out by saving on carry and logistical costs, avoiding tying up capital, carrying stale stock, and saving the sale where the retailer would previously have had an unsatisfied customer. The cost-benefit analysis really plays out in the retailer’s favor along with the desire to serve what’s in the best interest of their customer. 

Inventory overhead and management?

We’ve seen a couple different benefits early on. For one, we see retailers paring down offerings which reduces risk on their part. For instance, a retailer may carry one or two options on a high-end audio line and offer the rest through Dropship. Another nice surprise we’ve noticed is that products can really stand out on Dropship, identifying new opportunities for the retailer. If a certain product is over performing on Dropship, it may be an opportunity to bring that item into the store and test out whether it’s a good product to physically carry as well.

Has anything surprised you while implementing this endless aisle experience for your clients?

It’s awesome to see which types of products are successful on a drop-ship program versus what brands are really successful in-store. - Justin Drage

The growth really surprised me. I always thought it would be successful but I didn’t expect it to be as successful right away. It’s awesome to see which types of products are successful on a drop-ship program versus what brands are really successful in-store. It’s interesting to see which products pop out of the weeds and really surprise us on Dropship. We’ve definitely found customers drive different products on Dropship than in-store. When you can go from 100 options to over 1,800 on Dropship, using that data to understand those surprises, what your merchandising mix should be and what products you should consider physically stocking becomes really valuable.

What do retailers need to prepare for implementing Dropship?

The program is great as it’s almost an out-of-the-box setup – plug and play and be on your way! The biggest underestimation from the retailer we’ve found is the amount of setup it takes to make sure you have the customer service element in place – either at the store or corporate level. Retailers need to make sure they have service procedures in place when there are issues with delivery such as missed shipping, damaged product, etc.

Another challenge we hear regularly from clients is wanting to know how similar retailers manage their business when it comes to sales targets. They struggle with excuses from their sales teams as to why they aren’t hitting sales targets. With Dropship, sales teams have to find another excuse because a lot of typical reasons (didn’t have what the customer was looking for, out-of-stocks, etc.) are eliminated. Coaching sales reps becomes a lot clearer to identify where they can grow and do better to hit their targets.

What are the biggest changes you’ve seen in businesses that have implemented this program?

Retailers are adding six figures to the bottom line on a yearly basis. - Justin Drage

The biggest opportunity is right to the bottom line with explosive sales. With almost no training, stores that were in our beta program increased revenue by over $500 per month (achieved through additional revenue and year-over-year growth – not cannibalizing in-store sales). These retailers are adding six figures to the bottom line on a yearly basis by incorporating a quick solution that allows them to better serve their customers.

What has VoiceComm learned from the initial Dropship trial?

We’ve learned the biggest reason the program is successful is because it’s completely integrated with iQmetrix. There’s no extra work from a sales perspective, accounting perspective, etc. When it’s not integrated, the sales team loses excitement and participation drops if it adds an extra step outside the sales process.

Where do you see Dropship going in the future? How do you foresee Dropship being used by retailers and their customers as the demand for a consistent, omnichannel experience grows?

With Dropship, smart sales organizations will be more consultative and find out what their customer really needs – allowing them to build strong relationships in a short amount of time. - Justin Drage

I think the smart retailer will use it to redefine the sales process as a whole. Sales associates will typically sell what they know they have available. With Dropship, it allows the smart sales associates to really drill down and find other products that the merchandising team isn’t bringing into the store and what might be a good opportunity to add product. Smart sales organizations will be more consultative and find out what their customer really needs – allowing them to build strong relationships in a short amount of time.

 

What to learn more about iQmetrix Dropship? Email IntegratedSolutions@iQmetrix.com

 

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VoiceComm is the premier mobile accessory distributor for the North American market. Our diverse, high profile product portfolio coupled with our commitment to serve has allowed us to quickly become the go-to destination for wireless accessories in the market. With a focus on what's important for indirect dealers and wireless retail, we inspire through customization to develop the programs and resources businesses need to succeed.

For more, contact vcdropship@myvoicecomm.com or visit myvoicecomm.com/dropship 

Topics: Retail Operations, Dropship, Retail Marketing

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