How drop shipping can drive down cost and grow revenue

Think of drop shipping and you might imagine a small, start-up online entrepreneur selling a relatively small range of products sourced from suppliers who handle the shipping and delivery.

But drop shipping can also be a powerful tool for larger, established retailers looking for ways to maxmise revenue, drive down cost and enhance fulfilment options.

Here we look at some of the advantages to be gained from drop shipping, and at how to seamlessly integrate it into your existing business model.

The rise and rise of drop shipping

Consumers’ love for the convenience of online shopping has seen drop shipping grow exponentially. This year, the global drop shipping market is estimated at a whopping US$434.98 billion, with the Asia Pacific region accounting for US$156.59 billion of that value, while annual growth is predicted in the range of 22% until 2034.

Over the next decade, growing middle-class wealth is expected to see Asia Pacific dominate the global drop shipping market as consumers look for ways to spend their disposable incomes, with overall market value expected to rise to US$939.50 billion.

Understanding the benefits

Given these numbers, it makes sense for established retailers to consider ways to get a slice of the drop shipping market pie. And, as well as revenue growth, drop shipping can offer a range of benefits to recognised brands.

For a start, by sourcing and shipping products directly from the supplier as and when customers want them, you avoid the overheads that come with warehousing and the costs of potential spoilage. This is especially true for retailers, such as furniture and homeware vendors, that sell large items requiring ample storage.

Not having to warehouse stock also allows you to offer a wider range of products, and you get to trial new product lines without having to buy large volumes up-front, thereby lowering the risk of being left with unsold stock.

Using drop shipping also gives you an added fulfilment option when it comes to meeting your customers’ desire for fast, efficient delivery.

What’s more, established brands with an existing online offering and customer base can avoid some of the pitfalls that come with setting up a drop shipping business by leveraging existing suppliers, sales channels and customer support.

Managing the risks

Like all aspects of retail, drop shipping is not without risks that need to be managed for brand protection. Suppliers need to be carefully vetted to ensure shipping costs and estimates are reliable and accurate, legal obligations are met and product quality is maintained.

At the other end of the supply chain, customers need to receive the same level of care and support as if they had bought from your warehoused stock, so that the buying experience is seamless. That means giving your people up-to-date information about drop ship orders and empowering them to quickly address any issues.

Choosing the right partner

Making the move to drop shipping as seamlessly as possible, for both you and your customers, means choosing a technology partner who can help you integrate it into your existing business model in a way that lets you easily track drop shipped orders and inventory.

That’s where Infinity comes in.

With Infinity, you can easily create a new stock item that is added to your inventory but flagged as a drop ship product for order fulfilment.   

You can then search for and retrieve drop ship orders and monitor their progress to delivery just as you would with a conventional order.

And if the customer changes their mind and wants to return or refund the item, Infinity can bring the product into your inventory so it can be receipted, counted and returned to the supplier.

When it comes to drop shipping, Infinity gives you the flexibility to expand your offering and manage orders without the cost of end-to-end inventory management. You get to choose what’s best for customers and most profitable for you.

Drop shipping in practice

When one of Australasia’s best-known furniture retailers was looking for a way to expand the range of items on offer from existing suppliers without increasing warehouse capacity, they turned to Infinity to handle drop shipped inventory and orders.

The process is streamlined and easy.

When a customer goes to the online store and identifies a drop ship product they want to buy, a new stock item is instantly created on the fly via an Infinity API that connects the web store to the supplier’s system.

The item becomes part of an order that is tracked through to completion, as well as being assigned to a physical store based on the customer’s delivery address and post code.

If any issues arise, the customer can go instore and know that their query will be handled, up to and including order cancellation, while store staff can retrieve and view the order just like any other.

The result? An expanded product offering and seamless customer experience.

Want help to get the most out of drop shipping?

If you’re looking for help to meet the demands of today’s and tomorrow's delivery conscious shoppers, get in touch. We’d love to help you deliver the shopping experiences customers expect.  

Making sustainability sustainable

Sustainability has been a hot topic in recent years, with businesses across all sectors recognising a need to demonstrate their commitment to the environment. And retail is no different.

Real-world evidence suggests that sustainability isn’t just a buzzword or a nice-to-have anymore but something that businesses need to build into their future plans if they are going to meet demands from customers, investors and regulators.

Here we look at some of the drivers behind the move to sustainable retail and at how, when done well, taking action can help to lower costs and increase market share. We also look at how not getting things right can pose significant risks to your brand.

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What is sustainable retail?

Becoming a sustainable retailer isn’t a single action point or strategy. Instead, it can take a variety of forms, from investing in eco-friendly packaging to sourcing inventory locally or stocking only natural, chemical-free products, as well as reducing energy use and other forms of waste.

It also means taking on climate change. At a time when retail supply chains contribute to 25% of global greenhouse gas emissions, it is no surprise that decarbonising supply chains is top of the list when it comes to sustainability priorities, even as it remains one of the more challenging ambitions.

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Meeting customers’ sustainability expectations

One of the biggest drivers behind the shift to sustainable retail is consumer pressure. Globally, customers are choosing to shop with retailers who measure up to their sustainability expectations. 

In Australia, a study found that 93% of Gen Z shoppers would prefer to buy from brands that aligned with their sustainable values, while a significant number of baby boomers felt the same way, at 63%. Meanwhile, 85% of New Zealanders say they are willing to change their shopping habits to be more sustainable, and many Kiwis expect their employers to operate more sustainably.

A Deloitte study found that consumers’ decisions are influenced by a range of sustainability considerations, from the use of recycled materials to the impact of climate change. It found that 30% of customers check whether a product is recycled or biodegradable before buying, while 53% of people who had experienced an extreme climate-related event in the past year went on to buy sustainably, compared to 38% of those who had not.

Investors as well as customers are placing increased demands on retailers to demonstrate their sustainable credentials, including through adherence to environmental frameworks and regulations.

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Taking action for a sustainable world

So, how are businesses incorporating these demands into their business models?  

In 2024 Deloitte found that 51% of surveyed companies globally were using more sustainable materials, 49% were increasing energy efficiency and 48% were developing new climate-friendly products or services.

One business putting its sustainable goals into action is furniture manufacturer and retailer, Koskela. At the recent Australian Retail Association Leaders Forum 25 in Sydney, co-founder and CEO Sasha Titchkosky said all of Koskela's furniture is manufactured in Australia, reducing the carbon footprint associated with transportation. What’s more, they plan to be fully circular by 2027, so that all products will be repairable, reusable or recyclable, while an estimated 90% of their furniture will be made from recycled or repurposed materials by 2026.

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Reaping the rewards

For businesses that commit to the path of sustainability, the rewards can be plentiful.

Offering the types of sustainable products discerning customers demand can attract new buyers and build satisfaction and loyalty among existing ones. This is particularly the case for ‘recommerce’ retailers who give buyers a one-stop-shop where they can buy items new and sell them back second hand to the same store, thereby providing multiple touchpoints in a circular business model.

Tapping into the market for sustainable goods can also grow revenue by allowing retailers to charge price premiums for items that truly meet the sustainable standard.

Meanwhile, retailers can boost the bottom line by reducing costs through energy savings and other forms of waste reduction, and they can improve supply chain resilience by sourcing products locally, thereby minimising the risk of disruption and price volatility.   

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Avoiding the traps

While adopting sustainable practices can be good for business, it can also pose a risk when those practices aren’t well-implemented or when reality doesn’t meet the hype.

In one study, the Australian Competition & Consumer Commission found 57% of businesses reviewed were making potentially inaccurate claims, a practice known as ‘greenwashing’. This behaviour ranged from making vague or unqualified claims about products being ‘eco-friendly’ that weren’t backed up by information that allows customers to make an informed choice, through to falsely claiming that products were ‘100% recyclable’ or ‘100% carbon positive’.  

Making these sorts of unsubstantiated claims, whether intentionally or not, can lead to loss of trust, reputational damage or even expensive litigation.

On the other hand, being transparent and specific about sustainability goals can build consumer confidence and boost return business.

When it comes to sustainability, the old saying that honesty is the best policy holds true.

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Tracking the financial impact

Being a successful sustainable retailer means understanding the financial implications of any changes you might make. While moving to sustainable practices can save money in the long run, some changes, like switching suppliers, can bring short-term costs.

Keeping an eye on your cash flow and margins is an essential part of making the shift to a sustainable business model. You’ll also need to track your inventory’s sustainable credentials to make sure you’re keeping pace with customer demand.

Infinity allows you to do all this and more, supporting you on your journey to being a sustainable retailer. Using Infinity, you can enhance and configure your stock data to capture relevant information about products’ sustainability, such as whether they qualify for a sustainability accreditation scheme.

It then arms you with a wide range of reports that offer a comprehensive understanding of your stock levels and how stock is performing, so you can see how sustainability translates to turnover.

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Want help to get the most out of sustainability?

If you’re looking for help to meet the demands of today’s and tomorrow's environmentally conscious shoppers, get in touch. We’d love to help you deliver the shopping experiences customers expect.