The whitepaper, “Supply Chain Collaboration in Transformative Vertical Industries: Implications of Omnichannel and Dropshipping,” examines the motivations, challenges, benefits, and supply chain implications of online shopping and home delivery. The study suggests that retailers and manufacturers that have adopted a high degree of electronic collaboration have benefitted the most from the dropshipping model.
“The majority of study participants were at least five years into the journey from traditional replenishment to drop shipment, and, in most instances, the further along into the journey of retail and manufacturer collaboration, the more success each party experienced,” said Dr. Zach G. Zacharia, associate professor of supply chain management at Lehigh University. “Clearly the more we understand how to plan for and implement a dropship program, the better prepared retailers and manufacturers will be to take advantage of the opportunities and avoid the risks that will arise in this new retail reality.”
Of those surveyed, as many as 88% of participating retailers see dropship as inevitable for their long-term success. Other retail findings included an increase in revenue, reported by 87% of respondents, and improved customer service after adopting dropshipping as reported by 84% of retailers surveyed. Manufacturer benefits of dropship included increased revenue, reported by 66% of manufacturers, and 71% noted a significantly improved relationship with retailers following dropship system integration.
However, industry change on such a massive scale is not without its challenges. Systems limitations has proven to be the greatest obstacle to successfully implementing dropshipping. Systems limitations were reported to be a hindrance by as many as 32% of retail respondents and almost as many retailers believe their process is too immature to support dropshipping. Manufacturer obstacles slightly vary from retailer concerns, with 40% of manufacturing respondents facing system integration challenges and 45% challenged by competing priorities.
While the concept of dropshipping and the immediate benefits of elimination of excess inventory and warehousing costs are well-established, the study provides a new level of insights to help navigate dropshipping in the immediate future. The research clearly and conclusively demonstrates that successful e-commerce and dropship programs are highly correlated to the level of collaboration developed between the retailer and the manufacturer.
Steve Scala, Executive VP of Corp. Development, DiCentral Corporation