What’s the difference?
Dropship = fulfillment optimization.
Marketplace = long term growth.
Dropship
The purpose of dropshipping is to reduce supply chain complications for a small number of carefully-selected products in core categories. When dropshipping, retailers sell products that are shipped directly from the suppliers, but they retain control over pricing, promotions, and customer service.
Marketplace
The purpose of online marketplaces is to transform a business by significantly scaling online assortment and availability without significantly increasing overhead. When opening a marketplace, retailers sell products that are shipped and priced directly by sellers to gain merchandising agility and scale faster.
Dropship vs Marketplace and your revenue potential
Explore how far each model expands your catalog and therefore your revenue potential.
Marketplace: the fastest way to scale product depth and breadth. It’s a new model where the retailer doesn’t bear the overhead of buying, storing, shipping, or servicing products.
Dropship: a supply chain efficiency where the manufacturer or distributor ships the order. The retailer still needs to market, sell, and service products, and integrations are complex; limiting product expansion.
Owned inventory: the most controlled product sourcing model which is expensive and hard to scale without significant risk. Retailers buy, store, promote, ship, and service the products.
Limitations of dropship
Many retailers utilize a dropship model but could gain greater speed, scale and efficiency by adopting a marketplace mindset.
LOW
LOW
LOW
LOW
SLOW
HIGH
HIGH
HIGH
HIGH
LOW
LOW
FAST
HIGH
HIGH
HIGH
HIGH
MEDIUM
MEDIUM
Profitabilty
Scalability
Range extension
Control over customer experience
Price control
Price competitiveness
Time to market
Complexity of sourcing
Complexity of IT integration
Makes most sense for
Dropship
Marketplace
(Complex EDI integration)
(Standards-based REST APIs)
• Core products that are not easy to store and ship
• Small number of key vendors who have advanced logistics capabilities
• Complementary categories
• Depth in core products
• Long tail items
• Product testing
• Products with shortage
• Large number of vendors with diverse logistic capabilities
What’s the real difference between dropship & marketplace? Read more on Mirakl Blog
"With Dropship it means that you’re committed. You’re in control of your assortment, pricing, and promotional strategies, and you need to establish relationships which takes time. With marketplace you can enter new categories and complement existing assortment at a very fast pace, and even enter categories in which you’re not an expert."
Thierry Hay-Sabourin, SVP, eCommerce, Best Buy Canada
Marketplaces are the evolution of dropship
An online marketplace brings the fulfillment savings of dropshipping while quickly scaling the breadth and depth of your offer. Download our eBook.
What’s in the eBook?
- How Dropship and Marketplace work together
- The differences between Dropship and Marketplace sourcing strategies and business impact
- How to best capture the long tail