Digitize Your Supply Chain With Marketplace Dropshipping

The COVID-19 pandemic has thrown global business into turmoil. Known as the biggest since the Spanish Flu in 1920, this pandemic is testing the resilience and agility of the business mindsets, approaches, processes, and tools that we’ve grown used to over the past 100 years. The retail industry is one of the industries hardest hit by the pandemic, and within the retail industry, the fashion and luxury (F&L) vertical has been hit even harder.

Due to the travel restrictions and decline in consumer spending caused by job losses and pay cuts, many fashion and luxury retail companies saw a marked decrease in their revenue.

Major fashion retailers in the UK and Europe such as Arcadia, Debenhams, DW Sports, Monsoon, Cath Kidston, Laura Ashley, Brooks Brothers, and M&Co were forced into administration, putting thousands of jobs at risk

Zara expects to close as many as 1200 department stores around the world. US retailer Gap hopes to move to a franchise-only retail model in Europe, closing all of its own stores in the UK.

Meanwhile, the fashion e-tailers ASOS and Boohoo are thriving in the pandemic, thanks to their superior e-commerce platforms. Between 2019 and 2020, ASOS quadrupled its profits, and Boohoo reported a 51% profit increase in the first half. Founded in 2000 and 2006 respectively, ASOS and Boohoo are capitalizing on the collapse of brick-and-mortar retail through acquisitions—the 243-year-old retail chain Debenhams has been acquired by Boohoo, whereas Arcadia’s Topshop, Topman, Miss Selfridge, and HIIT brands have been sold to ASOS. After the acquisition, Debenhams and Arcadia stores will be closed permanently.

“…the companies best able to react to these (pandemic related) shifts in fulfillment challenges will be those companies withmultiple distribution touchpoints.“

Compared to USA counterparts, the vast majority of UK fashion retails are lagging behind when it comes to omnichannel retail and online marketplace integrations. Many brands rely on old-fashioned, rigid, long-term planning and do not make use of data and analytics that would allow them to be more agile in their strategy.

To keep up with the fashion industry’s fluidity, constantly-changing consumer behavior, and to stay afloat during crises like the ongoing pandemic, fashion brands must embrace innovative sales and distribution strategies.

An online marketplace is an e-commerce website or a mobile app that facilitates brands and customers to sell and buy products.

Once an e-commerce marketplace sells a product, it passes the customer order to a third-party supplier, who ships it directly to the consumer. The consumer is generally oblivious to this process, which happens in the background of the marketplace.

For example, the Germany-based upmarket marketplace Breuninger sells fashion and luxury products of more than 1000 brands, including Boss, Gucci, Burberry, Polo, and Karl Lagerfeld, through their online marketplace. When Breuninger sells a Burberry handbag, the product is shipped to the end consumer in Burberry packaging.

Figure 1: Dropshipping at a glance

Whether your company is going through a crisis or not, dropshipping and integrations can present many opportunities and increase the profitability of your fashion business.

Global brands can use marketplace dropshipping to switch the distribution to an alternative location (e.g., 3PL distribution center, ship from store, dropshipping from an alternative territory) in times of disruption or stock unavailability. ‘Ship from store’ further enables omnichannel fulfillment. Due to travel restrictions, retailers in the US are converting their department stores to distribution and fulfillment centers.

For example, with travel restrictions and the temporary closure of distribution centers in the US, a luxury retailer in the UK can ensure business continuity by shipping global online orders from an alternative distribution center in Canada.

Dropshipping and marketplaces enable brands to be truly global, agile, and able to adapt to disruptions.

66% of retailers report that the use of dropshipping also increases revenue to the tune of 14% or more.