The traditional wholesale model is broken – and Covid is not to blame.

The model has been antiquated for many years. It’s just that now e-commerce retailers and suppliers have much smarter options than ever before. 

Consider how a traditional wholesale deal works. Typically, it means taking on more and more warehouse space. Even for fast-growing retailers – in a world with finance options – it’s difficult to commit to a deal. 

One thing the Covid pandemic has done is made consumer demand more erratic than ever before; retailers suffer the risk of building stockpiles of products that cannot be sold at profit. That dreadful ‘O’ word – overstock – is a profit killer. Deep discounting ensues: think Black Friday discounts, every week, without any of the upside. Luckily, there is a smarter way to trade.

B2B2C marketplaces: Smarter than wholesale

The B2B2C marketplace is a pandemic-proof model, but it’s more than a pandemic workaround. Where the pandemic quickly made clear the need for wholesale to switch online – cue the rise of the B2B marketplace – the smarter B2B2C marketplace creates more efficiencies for suppliers and retailers, from ship to shore.

So, how exactly does it all work? With a B2B2C marketplace, retailers can scale without holding inventory. Meanwhile, suppliers can sell more, more often.

What is the B2B2C model?

Once a customer places an order, the retailer pays the supplier for the product. This frees up working capital tied to holding physical inventory, so retailers can invest in other areas of their business – such as staff, growth and marketing.

Suppliers handle fulfilment, sending orders directly to the customers of retailers. It takes the load off retailers’ shoulders as they don’t have to worry about holding and managing inventory or delivering goods to customers. It’s dropshipping, but not as you know it. Smarter than wholesale, much more suited to the nuances of e-commerce.

For suppliers, plugging into a B2B2C marketplace helps reach more retailers without needing to spend on business development or channel marketing. For retailers, B2B2C marketplaces provide greater access to great products, all within a single platform. It means retailers can do what they are supposed to do: good retailing. That means good marketing, good customer service, good user experience, good merchandising and great branding.

The changing journey from ship to shore

In a world where experimentation is necessary to stay on top of the game, new business models play a role in helping fast-growing businesses solve challenges faster. In this world, the key is the ability to pilot a program at low cost and risk.

That’s particularly important for retailers in Australia, who are so geographically isolated from the rest of the world. 

When it comes to B2B marketplaces, most operate with offshore warehousing or force retailers to hold inventory before selling to customers. The dreaded MOQs from an outdated and incompatible wholesale model start creeping back in.

If products don’t sell, retailers get stuck with excess inventory, and sometimes debt. If products do sell well, smaller retailers often can’t afford to purchase enough inventory upfront to keep up with demand. 

What’s more, it can be difficult to source inventory fast enough from factories and warehouses overseas. The customer has already moved on by the time the product arrives on Australian shores.

Dropshipping, the Aussie way

This is why wholesale this year is moving towards B2B2C marketplaces such as Dropshipzone. With the B2B2C marketplace, there’s less risk (and waste) for suppliers and retailers on either side of the value chain. There’s also potential for greater upside down the track. 

As a supplier, a single dropship order from a retailer can quickly pave a path to bulk orders. As a retailer, you pay for the goods only when you get a sale, so you aren’t hamstrung in your ability to experiment in business. If the bar stools aren’t flying out the door of your online store, you can easily pivot to selling BBQs, bedding, even beauty products, instead.

The best part is, with marketplaces like Dropshipzone, you keep it local. The goods are already in Australia, in your supplier’s warehouse, at time of sale. This is dropshipping, the Aussie way. 

Are you still wholesaling the old way in 2023? Make ship happen with Dropshipzone today.

About the author: John Barkle GM of Dropshipzone.