Step 2: Determine Your Value Delivery Method
Your chosen value delivery method is the engine that drives your ecommerce business. It is how you will bring your products to your customers, and it plays a critical role in your supply chain logistics. This process is responsible for sourcing, storing, managing, selling, branding, packaging, and delivering your products from the supplier to your customer.
Choosing the right value delivery method is crucial to delivering the value that you promise to your customers when they make a purchase on your website. So, how exactly are you going to do it?
Here are some of the best value delivery options:
Dropshipping is the most hands-off approach to running an ecommerce business. You simply need to set up a website and a form of payment collection, and then you can start selling products. As a dropshipper, you do not need to worry about storing or packing the stock, because your supplier will send the product directly to your customer.
While dropshipping is convenient, it does come with some risks. If your supplier makes a mistake or damages the goods, your brand reputation and customer reviews will be affected. Additionally, outsourcing your product’s packaging and shipping can lead to a loss of control over your product’s branding and quality control standards.
Wholesaling and Warehousing
This approach involves having products shipped to your own warehouse. You will store, package, and ship your products directly to your customers. Compared to dropshipping, wholesaling and warehousing offer more flexibility, customization, and higher profit margins. However, this method requires more effort and a greater initial investment.
You will need your own warehouse space and staff to manage it, and you will also need to pay for all inventory outright, as well as the costs of shipping it from the wholesaler to your warehouse. As a result, many ecommerce businesses outsource their order fulfillment to a third-party logistics (3PL) provider as they scale up.Skip to Step 10 to learn more about how 3PL providers can help you grow your business. Alternatively, if you are short on time, provide us with a few details about your business, and we will match you with 3PL providers tailored to your needs.
Private labelling is a solution that allows you to create a unique product exclusively for your business. You provide your prototypes and product specifications to a manufacturer who creates the product for you. You can either have the product sent directly to customers, or you can distribute it yourself.
This method is best-suited for companies that have ideas for innovative new products but lack the equipment, space, or funds to produce them.
This approach involves applying your own brand’s name and logo to generic products purchased from an online distributor. The advantage of white labeling is that it allows you to get started easily by ordering stock that carries your branding. You can then sell it through your sales channels.
The downside to white labeling is that you are obligated to purchase bulk stock, which means you may be stuck with unsold items. If that is the case, you will not be able to return them to the supplier.
A subscription model requires customers to pay for products or services on a recurring basis. Ecommerce businesses like Amazon, Netflix, and Wix have found success by using subscription models. This convenient option is also in demand in niche areas, as seen in startups like Beer52 and Cornerstone.