Why Retailers Are Turning to the Marketplace Model

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How Retailers Use Dropshipping To Grow Revenue With Zero Inventory Risk



Oct 9th, 2023


Dropshipping is a growing area of ecommerce - Nowadays, more and more companies have decided to adopt the model, particularly curated marketplaces selling from an array of 3rd party vendors.

Marketplaces will exceed $7 trillion in revenue by 2024; as a result, many well-established, traditional brick-and-mortar Retailers are beginning to migrate into the space to diversify their distribution channels.

Dropshipping Explained

Dropshipping is a type of fulfillment model whereby a Retailer lists a range of products for sale on their online marketplace without physically holding the inventory.

When a purchase is made, the customer's order is routed back to the supplier of those products, who then ships the item straight to the customer on behalf of the Retailer, often white labeled as the Retailer, for a seamless delivery experience.

Advantages of The Model for Retailers

One of the core reasons for the growing popularity of the model is that it offers several advantages over more traditional distribution models.

New Revenue Streams

The dropshipping model allows Retailers to diversify their revenue streams by incorporating new vendors and products at a fraction of the cost of more traditional distribution channels. These new vendors can be onboarded quickly, and therefore, revenue can be generated faster.

Product Expansion

The dropshipping model allows Retailers to expand their product catalog much faster and with zero inventory risk because they do not need to allocate resources toward the inventory's handling, storage, and end distribution.

Zero Inventory Risk

By incorporating the dropshipping model into their operations, Retailers can generate a new revenue stream with a significantly reduced investment than traditional distribution models. This can be done with little to no inventory risk at all.

A Retailer may onboard a new 3rd party vendor and, using the dropshipping model, eliminate the risk profile by removing the need to retain inventory in their distribution centers as the 3rd party vendor handles delivery.

New Vertical Experimentation

Another aspect of this online e-commerce model that attracts many Retailers is the ability to expand into new product categories, run trials in new product ranges, and expand into new verticals and markets.

Greater Customer Retention

Tied in with the point above, the model allows Retailers to retain customers longer. This can work due to a more extensive product selection, often similar or related to the core offering by the Retailer. Since customers know they can get everything they need from that Retailer's platform, they are more likely to return to do so.

Onport- Scalable & Reliable Dropshipping Infrastructure

Onport is an Ecommerce Marketplace and Dropshipping Platform enabling companies to centralize the core areas of backend marketplace dropshipping operations using next-generation composable technology - inventory syncing, order routing, shipping workflows, payment automation and returns management.

With Onport, we were able to launch in less than three months, which we just couldn’t have done, had we built the system ourselves.”

Frank A. Ricciardi | Founder & CEO at Maavee

Over 200+ companies in the e-commerce space are future-proofing their business with a solution trusted by brands such as Stadium Goods, Cupra, Ivalo, and Naduvi.

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