With the world in the midst of the COVID-19 pandemic, B2B firms that are investing in digital transformation are winning in this new, socially-distanced economy because the shift to digital is here to stay.
As traditional approaches to supply chain, inventory management, and branch-based distribution are being tested and strained in this new environment, companies with the fundamentals of digital commerce in place are now asking: “What do we do next to keep driving growth and exceed customer expectations?”
The Hidden Growth Lever: Drop Ship
Adopting B2C principles and approaches can drive dramatic growth for B2B. Leading enterprise-scale retailers like Home Depot, Staples, Walmart, Costco, Best Buy, and dozens of others have used drop ship— the shipment of goods from a manufacturer or wholesaler directly to a customer on behalf of the seller (e.g., a retailer or distributor) that took the order—to drive tremendous top and bottom line growth, diversify and de-risk the supply chain, drive efficiencies in fulfillment, and exceed customer expectations.
Drop Ship Works in B2B
Some of the largest and most successful distributors, such as Grainger, Staples, and Cardinal Health, have used drop shipping extensively, and relied on it more than ever as demand has shifted to digital channels (e.g., during the COVID-19 pandemic). What makes drop shipping so powerful from a return on investment (ROI) standpoint is that the risks and operating costs associated with inventory ownership are removed. And when drop shipping is effectively executed, it’s a seamless customer experience, fully aligned with the seller’s brand and the buyer’s expectations when ordering for direct delivery.
The Drop-Ship Opportunity for B2B
In a recently released white paper*, BECK Ecommerce identified seven compelling advantages of drop shipping for B2B sellers.
- Meet customer expectations. Drop shipping allows sellers to offer broader inventory and selection, which enhances loyalty and drives incremental revenue.
- Minimize inventory exposure. With multiple suppliers on tap via the drop-ship model, distributors are ready for spikes in volume, while keeping the customer experience intact.
- Reduce supply chain risk. The ability of a seller to offer products that are delivered directly from a supplier to the customer, or deliver the product directly to a branch location, not only reduces supply chain risk but also eliminates the danger to and potential negative impact on human resources.
- Strategically deepen product assortment. Identify eligible product categories and work with capable suppliers and manufacturers that align to increase the assortment of sellable products.
- Enable assortment expansion across all B2B channels. Drop shipping can be extended into all B2B selling channels—ecommerce website. EDI, punch out, and other forms of electronic order entry.
- Gain a competitive advantage. An expanded assortment drives more revenue, keeps existing customers from looking elsewhere to meet their needs (increasing wallet share), and helps acquire new customers as they search for products.
- Preserve capital. Drop shipping is an exceptionally capital efficient model for B2B firms. It delivers all the competitive
and operational advantages of a broad assortment without
the costs associated with owned inventory.
Drop shipping, when well implemented with an experienced partner, can arm distributors with a powerful weapon in the ongoing competitive battle for buyers’ attention, while simultaneously enabling the delivery of an exceptional customer experience.
*The Hidden Growth Lever: B2B Ecommerce and Drop Shipping white paper was developed by BECK Ecommerce in collaboration with CommerceHub and was released in November 2020