The costs and benefits of drop shipping to customers

An article in the Wall Street Journal (January 26, 2017) titled “Drop Shipping set to go mainstream as more retailers get on board” describes retailers use of shipping directly from suppliers to customers as a way to increase variety offered and reduce costs to compete with eretailers.  Retailers claim that shipping from suppliers relieves them of inventory costs for bulky items and large color assortments. But asking suppliers to ship to customers while retailers remain responsible create associated challenges for handling returns, fulfillment as well as lower retailer visibility.  Associated strategic concerns include evolving suppliers to become retail competitors as they get direct access to customers.  How should retailers manage this tradeoff associated with drop shipping ? Can customer information be entrusted to logistics providers and not suppliers to preserve retailer relationships with customers ? How can retailer visibility to fulfillment be preserved under drop shipping

About aviyer2010

Professor
This entry was posted in Collaboration, consumer, Cost, delivery, Ecommerce, Operations Management, ordering, supplier, Supply Chain Issues. Bookmark the permalink.

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