January 30, 2017
In a move to better compete with e-commerce retailers, drop shipping has returned to the playbook of a growing number of retailers, such as Macy’s and Home Depot. The practice involves suppliers shipping online orders directly from their warehouse to consumers, which helps to cut inventory costs.
More products can be sold on a retailers’ website, even though it doesn’t hold those items in stock. Analysts say the strategy aligns with the growing trend of online shopping, and could help reverse online shopping declines at department stores.
Drop shipping is good for logistics companies, who are expected to handle inventory management, shipping and other responsibilities retailers typically take care of for small suppliers and manufacturers. A downside is third parties control a key part of a retailers’ supply chain, yet the retailer is still responsible for customer service and returns.
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