As an Ecommerce business owner, one of the most critical decisions you will make is choosing the right value delivery method. Value delivery refers to the method you will use to connect your customers with the products you offer. It is an integral part of supply chain logistics, which encompasses sourcing, storage, management, sales, branding, packaging, and delivery of products from the supplier to your customer.
In simpler terms, it’s how you deliver the value that your customer expects when they purchase your product. So, it’s important to get it right.
To help you make an informed decision, we’ve outlined some of the best value delivery options:
1. Dropshipping
Dropshipping is the most hands-off approach to running an ecommerce business. You set up a website and a form of taking payments through that website. When an order is placed on your site, it goes to your supplier, who will then ship the product straight to your customer.
While this approach eliminates the logistical side of things, it does come with a few risks. The supplier handling your inventory may damage goods, ship to the wrong address or even lose orders. In such cases, your reputation and brand are on the line. Plus, you won’t have control over your product’s branding and quality control standards since all packaging duties will be handled by someone else.
2. Wholesaling and Warehousing
Wholesaling and warehousing involve shipping products to your own warehouse from where you’ll store, package, and ship the products to your customers. This approach offers a more flexible and dynamic alternative to dropshipping and comes with better profit margins.
However, it requires greater initial outlay and more work. You’ll need warehouse space and a team of staff to manage it. Besides, you will have to pay for all your inventory outright, and shell out additional costs to ship the inventory from the wholesaler to your warehouse.
To mitigate these challenges, many ecommerce businesses choose to outsource the next step in the supply chain, known as ‘order fulfilment,’ to a third-party logistics provider.
3. Private Labelling
A private labelling solution involves engaging a manufacturer to create a unique product for your business to sell exclusively. You provide your prototypes and product specifications, and the manufacturer makes the product and either sends it straight to the customer or back to you for distribution.
This is suited to businesses with innovative new products but lack the equipment, space, funds, or motivation to make it themselves.
4. White Labelling
White labelling involves applying your business’s name and branding to a generic product purchased from an online distributor. A good way to start is by looking at products already being sold successfully online. If a white label solution is available, you can order the stock carrying your branding and sell it through your sales channels.
However, because you’re buying in bulk, you’ll be stuck with the stock you ordered if you can’t sell it.
5. Subscription
Subscription models rely on billing customers on a recurring basis, offering convenience to consumers. Examples of notable ecommerce businesses that successfully use a subscription model include Amazon, Netflix, and Wix. In niche areas, startups such as Beer52 and Cornerstone demonstrate the great demand for such services.
In conclusion, selecting the right value delivery method can have a significant impact on your Ecommerce business’s success. We recommend that you evaluate each approach and determine which one aligns best with your business model, budget, and growth targets.–