With the explosion of online retail and e-fulfillment, there is an increasing number of business models that are being deployed by retailers to fulfill orders.
Some models are more prevalent with proven success records, while other new emerging methods are in their introductory stages.
The option of selling goods online has created disruptions in the way supply chains were configured, causing new models to appear and disappear on a daily basis. In this blog, we discuss some of the models which have been deployed and achieved a relatively higher degree of success with given market dynamics.
Market-Place Models
Being used by most of the mass online retailers, this model is hugely popular and less risky for e-tailers whose main objective is new customer acquisition. Most of the risks are transferred to the supplier, as the online retailers do not own any inventory and associated costs. In this model, the online retailer acts as an enabler for the sale. The same sets of rules are applied to all participants and trust is generated with the help of features like buyer and seller reviews, ratings and guarantee/integrity of payments.
Inventory Models
Many early birds in online retailing started with this model where they buy the inventory from supplier and then sell them through their online portals. The online retailer owns most of the risk. However being in control of the product enables the retailer to provide a superior post purchase experience to the customer. Keeping visibility on the levels of stock, knowing where the product is physically located and physically performing the picking, packing and shipping functions allow retailers to only accept orders when they have the necessary stock in place. In turn, this will assist in keeping customer expectations and requirements in order and build successful customer relationships.
Managed Market Place Model
This model has become more popular in developing markets, as the online retailer wants to have final control on the quality, branding and documentation of the goods being sold before they land in the hands of the customer. In this model, the supplier owns all the risks except that the goods must pass through various checks in the online retailers’ fulfilment centre before being delivered to the customer. There is a need for this kind of model due to challenges with process compliance and quality with suppliers.
Click and Mortar or Bricks and Clicks Model
There are few variants that exist within this model:
Online Franchisee Model
Some retailers are also experimenting with franchisee models where the franchisee, who does not own any inventory, helps you place orders online, through a device. The order is then delivered to your home. More like a direct sales model, these franchisees act as your sales booking agents. This model helps to reach customers who may not be comfortable with using tech devices to place orders.
Omni-Channel Model
This is the mix of all above models that offers un-limited choice to a customer for ordering and getting the product. Challenged by online retailing, big traditional retailers have hit back by introducing this model and successfully executing it. Though very complex to manage, the adopters of this model feel that the customers need to be given every choice, in order to delight and retain them as this is the only way to prevent their existing customers from switching retailers.
Adapting to Your Market
The evolution of technology is changing the way our world once bought and sold. The changes are happening so fast that any player who is part of the fulfillment chain can become extinct if not in tune with these market conditions. The overall understanding of retail as a business and the continuously changing market dynamics make it imperative for any retailer adopting any of the models stated here to choose an e-fulfillment partner that brings this knowledge to the table. At BCR, we are in tune with these changes and continuously building our knowledge to provide a best-in-class solution to any e-fulfillment model of your choice.
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