The future of retail: embracing omnichannel innovation

Could combining dropship, marketplace, and in-stock models prove profitable?

Features By David Gallivan published 15 October 2024

The retail landscape has undergone significant transformations, with internet retailing becoming a substantial proportion of retailers’ revenue profile, accounting for over a quarter (26%) of total UK sales. As the best ecommerce platforms continue to expand, retailers have had to extend the number of products they sell online far beyond the number of products held within their distribution centers to meet customer demands for more choice and high-quality products.

However, this shift does not signal the end of traditional high street stores. Instead, consumer preferences are evolving towards hybrid shopping experiences, combining the benefits of both online and in-store shopping. This hybrid approach leverages technological advancements in physical stores and improvements in online order delivery times and costs. Customer satisfaction remains central in retailers’ competitive strategy with 96% of shoppers citing that positive delivery experiences encourage repeat purchases.

With brick-and-mortar stores evolving, retailers must adapt their strategies for sustainable growth.

David Gallivan

A balancing act

Presently, the retail market is split into two main models facilitating extended online product ranges marketplaces, and dropshipping.

Via marketplaces, buyers and sellers transact directly on platforms such as Amazon or eBay. Marketplace platforms act as facilitators, earning commissions for providing ecommerce real estate. Suppliers don't need to integrate deeply into the retailer's ERP systems, allowing for rapid product range expansion for retailers.

However, there are trade-offs: lower profitability margins due to commission fees, competitive pricing pressures, and additional platform usage costs. Customer experience can also be compromised, as suppliers are not always held accountable to retailers’ order fulfillment standards, potentially leading to delivery delays or product faults - diminishing the branded shopping experience. Additionally, retailers risk diluting their brand identity due to limited product differentiation compared to brands offering a hand-picked range. This is no good when customers desire a rich buying experience both online and in-store.

For customer longevity, retailers must offer a journey of discovery with trusted recommendations of high-quality products. To stay competitive, retailers can build their reputation with a considered selection of goods and a seamless end-to-end purchasing experience.

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