Why dropshipping is making a resurgence for small businesses

(Source: Supplied)

The notion of a garage startup is often romanticised. Practically speaking though, the idea of your own business busting out of your garage leaves much to be desired. So does the idea of waiting for stock to arrive which never makes it on time.

In the past, small retailers would take on stock, turning garages all over into mini fulfilment centres. Then, the model changed: what’s known as ‘just-in-case’ became a ‘just-in-time’ way of operating. It became more important to minimise the amount of time that a product would be in the supply chain.

Through Covid-19, retailers abandoned the practice of holding inventory on a just-in-time basis, suddenly unable to depend on a predictable supply chain where products could be purchased as needed.

But Covid isn’t the only culprit. These days, disruption can come from anywhere. A seven-second TikTok can single-handedly change the trajectory of a product, impacting its entire supply chain. It can be exciting, but it can also cause a lot of headaches along the way. 

In a joint study between Deloitte and Manufacturers Alliance, 80 per cent of those surveyed had experienced heavy supply chain disruption in the 12-18 months to June 2022. 

That’s why we’re moving beyond just-in-time versus just-in-case to a different model for supply chain management. 

Moving beyond just-in-time versus just-in-case

Just-in-time allows for no variation in demand, while just-in-case eats into profits. Neither is a good place to be this year. The goal is to create the most efficient supply chain possible for inventory management. 

We could benefit from shifting some of our focus away from the two operating models. Instead of overengineering the process from manufacturer to warehouse, we could further optimise the process from warehouse to end customer. 

Philosophically, it requires a shift in thinking – a little more focus on short-term planning, as opposed to a longer-term strategy. But that’s the nature of the beast in a world where we must expect the unexpected.

Ultimately, supply chains today remain in flux. The pandemic, war in Ukraine and economic downturns have led global supply chains to a juncture where we must reimagine a different way forward. 

The resurgence of dropshipping in 2023

What if I told you this ‘different way forward’ is actually the way back – the dropshipping method? 

It may come as a surprise, but dropshipping isn’t a new business model. In fact, it’s older than the internet. 

In the 1950s, mail-order companies championed the dropshipping method, where customers would place an order for a product over the phone for the product to end up on their doorstep. This was revolutionary. At the time, the method was led by the likes of JCPenney, Sears and Ikea, then experiencing periods of rapid growth. 

In the 2000s, more retailers started using the dropshipping method to sell furniture, appliances, mattresses and other products that were too bulky to constantly keep in stock. 

Even one of the world’s biggest furniture stores is a dropshipper by many definitions. Wayfair works with more than 16,000 supplier partners, with products on its website dropshipped directly to customers.

Scale your online store smarter

For innovators, the dropshipping method has always been a way to optimise resource allocation. It’s no wonder that many of Australia’s most successful marketplaces and fastest-growing SMEs have been built on the back of this method.

Increasingly, more are using B2B2C marketplaces with dropship capability to scale smarter. Even better, Dropshipzone, where all stock is already held in Australia.

With dropshipping, the size of your business isn’t confined to the size of your garage, warehouse or bank account. It can be a smart alternative to self-fulfilment or 3PL for growing businesses, even a supplementary strategy to test at low risk and cost. 

Are you looking for a smarter way to scale your online store? Make ship happen with Dropshipzone today.

About the author: John Barkle is the GM of Dropshipzone, Australia’s leading B2B2C marketplace. He has more than 12 years of experience in the media, marketing and advertising industry including a six-year stint in senior marketing roles at Woolworths subsidiary MyDeal. John holds a Master of Marketing and a Graduate Certificate of Marketing from RMIT University.