Drop Ship (DS) is another hot topic in Ecommerce. I will like to share how we did it differently by challenging the usual way it is done.
Here I will not explain further as there are a lot of god articles in Google God if you ask him. One of the examples is below article from Shopify. Thus one of the projects I had participated was to convince one of my clients to explore and start DS with full awareness of the disadvantages which is
Why Low margins? It happened if you DS from a dealer which bought from a distributor which bought from a manufacturer. Distribution 101 says that if a product need to exchange hands many times before it reach the consumer, then the product will be non-competitive if each hands takes a huge profit, or each hands can only take very small profit for the product to remain competitive. (Note: this is different from most explanation in the internet, but this is one of the major reason why drop ship fail for certain business).
So I asked the client, in his network, is there any manufacturer which was struggling in ?Ecommerce sales? If there was, let’s tried work directly with the manufacturer. Please avoid all distributor or dealers. We used the client network because they know each other and there was a basic relationship and trust (Power of Networking). True enough, he was acquainted with a major manufacturer key person. Thus we offered them our expertise in Ecommerce thru DS business models and we got the chance to try it.
Our second differentiation from the usual DS business models was that we focused only on this manufacturer and ignore all his competitors. We assigned a young lady to work full time with the manufacturer (of course with my guidance and tools). Thus in this DS business modal, she only listed and sold one manufacturer products on major marketplaces like Lazada, 11th Street and etc under one company name. In comparison, we saw other players mostly listing multiple manufacturers’ products.
This young lady worked closely with the manufacturer and minimized the inventories, shipping and customer service issue. As we concentrated on a single manufacturer, we were able to minimize all DS disadvantages and maximize all DS advantages. Thankfully sales improved rapidly, the manufactures relationship with us became stronger and the marketplaces started to treat us as the manufacturer representative. We were able to further secured exclusive price from the manufacturer. Additionally Marketplaces like Lazada started to invite us in their promotions and they provide promotion vouchers to make our listings even more attractive. We improved our competitive advantages! We did it by challenging the comfort zone of others which prefer to list multiple manufacturers;
Now here is the part where I want to reflect about what we didn't do right relating to comfort zone also.
When the sales reached certain stage, this young lady was efficient in what she was doing. However due to increase volume of business, the workload of operation such as processing orders, answering customer inquiries and shipping arrangement increased.
Logically, I encouraged her that now was the time she had more people in her team so that the growth of this business continues since she had solid business model now. However as previously she had not lead a team before, I took the effort to work with her closely to prepare the presentation for the management to request more resources. I presented on behalf of her, and of course the management of the company approved the additional manpower for her (Come on, I am a great salesman hehe). In reflection, this might be a mistake and maybe if she had presented, the outcome will be different.
Happily enough I thought she will appreciate this additional manpower and maximize it potential. However she started to hit a personal roadblock in training and managing a person under her. Most of the time she felt it was faster and easier if she did it herself. And when the new people asked her new question, she will prefer to take over the problem and solved it herself. Other department also prefers to continue to refer to her on all issues regarding the DS business.
Then the management of the company starts implementing new accounting system in the company. The manager of the project at that time had a high workload to key in the documents, and tried to utilize her new person for the project. Regretfully, this nice young girl was not comfortable with confrontation. She allowed her junior to be ‘borrowed’ and after a while, she was back to single person operation, doing everything for the business. We are back to square one.
End of this reflection, I am actually sad rather than angry because there are so much more I want to share with her, on Facebook Marketing, on Sales Funneling, on Google Analytics and etc. But she doesn’t have time for me! when other people paid me much more to consult them. How ironic haha. All her time was consumed by her daily workload which had now become a comfort zone to her.
One had to understand that a comfort zone is a limiting factor for personal growth. A cleaner (no disrespect) will continue to be a cleaner if she only cleans houses every day. If she is good in cleaning, more people will want her to clean their houses. There are only so many houses she can take. If she stepped out of comfort zone, hired junior cleaners and work out a way for the junior to do same job as good as herself, then she might evolve into a popular cleaning agency. It is difficult? Yes! She had to learn management, accounting and etc., but all this improve her personal values! She will improve her income and subsequently her family living standard. Most important, she will value herself more and enjoy the whole experience! All she need to do is just step out of her comfort zone.
I am now waiting, praying for this young girl to take the first step out of her comfort zone, prepare a presentation and face the management herself and get a new person to learn under her. Then she will have more room for me to explore the wonders of Ecommerce together and even be better than me. Else I fear if one day the management arrange a person above her to grow the business, then she had lost this golden opportunity.
That is not a ending which I want to see.
Be brave! Girl, step out and conquer the world!