ALL YOU NEED TO KNOW ABOUT
Marketplaces & Drop Shipping
Lately we’ve had a lot of interest from businesses and individuals wanting to set up a marketplaces and offer drop shipping as their fulfilment solution. As these types of models become more common, we thought it was a perfect opportunity to shed some light on the matter.
First of all, although both can work together, it is important to understand the nuance between marketplace and drop shipping.
‘In both models, the retailer doesn’t handle fulfilment.’
In both methods, it is not the website’s owner responsibility to handle fulfilment. One difference is that with drop shipping, suppliers handle dispatch and shipping, whereas with a marketplace they are referred as sellers.
Suppliers are often wholesalers or manufacturers, and sellers can be anyone but are often smaller cottage industry or established brands.
When a customer orders from a drop shipping website, they usually don’t know the logistics behind it and think they are buying from the online retailer without knowing who is processing and sending the order.
In a marketplace, it is clear that they are buying from a third-party brand or seller.
Drop shipping allows you to sell items without having to own or stock them. It is great for those who don’t have a warehouse or space to keep the products and/or don’t have the funds to invest in purchasing stock.
To grasp the difference between the two, it helps to see drop shipping as a fulfilment method, so its more about the supply chain than the product merchandising.
When the customer buys an item from your website (retailer), the order goes straight to your supplier, who keeps the physical products and tracks inventory. Then a transfer the funds takes place once, as order is placed, and the supplier ships it to the customer on your behalf.
A marketplace is an online platform that allows a wide variety of different sellers to sell their own products. The sellers can be anyone, that is willing to deliver the items on their own behalf.
This means that the end buyer will get the product, often with the seller’s branding, as opposed to the drop shipping model where the shipper doesn’t have their brand on the package.
These sellers can either handle the stocks and logistics on their own, or work on a drop shipping model themselves.
Shopify Apps for your store
Whether you choose to develop a marketplace or just work on a dropshipping model obviously depends on your brand and your personal business goals, but for both models, we’ve selected a few Shopify apps that will help you automatise and centralise everything.
FOR A SIMPLE, EASY SETUP MARKETPLACE, WE’D RECOMMEND
Instantly transforms your Shopify store into a fully functional multi-vendor marketplace, providing all the tools you need to run a marketplace business (from vendor and inventory management to order management and accounting). They are based in London, and the app is new to the market. It seems really intuitive and they plan to invest in this software and roll out more functionality.
FOR A MORE COMPREHENSIVE MARKETPLACE, WE’VE USED
It facilitates the process of adding sellers and keep track of their sales. Sellers (or vendors) can have their own profile and collection page with variety of products. Admin (or merchant) can easily set individual commission and global commission for all the sellers. They are an Indian based development agency, and although it isn’t as intuitive, and the support and documentation is quite poor, the software itself is good. Once you know how to use it, it works well.
THE MOST ESTABLISHED, STABLE AND COSTLY SOLUTION
Duoplane is built upon decades of experience in operations, customer service, supply chain management, and retail. The workflow and interface keep you and the trading partners organised, in sync, and focused. Easy to use, clean, clear look of the app with web and mobile interfaces. Duoplane is a full-featured, customisable solution that gives the tools you need to scale your eCommerce business exponentially.