Capitalize on the Drop Shipping Revolution
Drop shipping may well be a 3PL warehouse’s single-biggest opportunity for profitable growth in the next year. Considering that the growth of drop shipping is inextricably tied to the continued expansion of the e-Commerce market, it is an opportunity that will only grow larger in the years to come. This is a prime opportunity to increase revenue for most 3PLs.
According to e-Marketer, online retail sales will reach $1.915 trillion in 2016 – a 19% increase over 2015’s totals. While the pace of growth for overall retail sales is subdued, the digital portion of sales continues to expand rapidly, with a 23.7% growth rate forecast for 20161.
Digital sales also continue to be propelled as “m-Commerce,” AKA purchases made via a mobile device such as a phone or tablet, have become increasingly easier and more popular for online shoppers. As of Q1 2016, nearly 19% of all U.S. e-Commerce sales came via m-Commerce, according to a report from comScore2.
In Europe, the numbers are even more amazing. According to the Paris-based online retargeting provider Criteo, more than 40% of all e-Commerce purchases in the EU were made via a mobile device in 2015, a figure they project will rise to as high as 70% of all purchases by 20173.
This pattern represents a new and very significant trend. Consumers who were once reluctant to buy anything via a mobile device are now drawn to mobile-friendly sites and apps. Mobile purchases have soared as online retailers develop a host of secure, frictionless checkout systems like Masterpass, Apple Pay, and PayPal One Touch.
The impact of these combined trends is rapidly forcing nearly every retailer to become a multi-channel vendor. In order to survive and give consumers the convenience and selection they want – when, where and how they want it – retailers must now offer multiple means of making a purchase. Incredibly, according to Google, up to 85% of all online purchase are started on one device and then completed on another4.
The good news is that this strategy seems to be paying off for those retailers who have been able to adapt. Current statistics show that the average multi-channel shopper will shop more often, and spend three times as much, as an average single-channel customer.
These latest developments will only accelerate the growth of drop shipping. This is especially important to global retailers who are now able to fulfill online purchases via drop shipping arrangements with a 3PL who can offer them the ability to respond swiftly to the ever-shifting demands of their customers.
Drop shipping provides retailers with a host of tangible benefits, including the ability to offer a much wider selection of product options – to scale almost instantaneously – and even lower their inventory storage and management costs.
Given all of that, it is little wonder that up to 33% of all online purchases are now being fulfilled via drop shipping. And given the trends we are seeing across the marketplace, there is no doubt that fulfillment via a drop shipping arrangement will only continue to grow.
If you’re interested in learning more about drop shipping and how it can help your 3PL grow and increase revenue, download our latest free white paper, “The Four Ways 3PL Warehouses Can Profit from the Drop Shipping Revolution.”
Written by industry experts, our paper provides a detailed overview of the drop shipping process, summarizes the benefits and challenges, and even identifies what 3PLs must do in order to capitalize on this opportunity.