What are the different types of suppliers to collaborate with in 2022?
In terms of e-commerce, there are different options: the traditional format, but also dropshipping and presence on marketplaces. Moreover, these last two formats show some similarities.
They offer real opportunities for anyone wanting to enter the e-commerce market. However, these are indeed two different things: each model is unique. Let’s see what differs between dropshipping and the so-called marketplace model to help you optimize your business and your sales catalog.
Definitions: dropshipping versus marketplace
The marketplace is translated, in French, by “market place”. It is a sales space open to merchants , which in particular allows sellers to be more visible on the Internet.
Dropshipping, on the other hand, means “direct delivery”. It’s about selling on the Internet without owning any stock.
What is dropshipping?
Dropshipping is a form of e-commerce where the merchant offers his catalog but does not hold any stock of goods. He is above all an intermediary who presents products to the buyer and who automatically sends purchase orders to his suppliers.
It is also the latter who manage all the logistics as well as the shipping of the products.
In dropshipping, the main role of the business is to choose suppliers and products, then to put its catalog online on a site and to promote it . This is a great way to get started in the online retail market without having to upfront a huge amount of money and without having to manage inventory, while generating sales.
This buy-sell model avoids taking significant financial risks . Indeed, the product is purchased from suppliers only when an order is placed by a customer. It is therefore a very interesting method of sale in terms of cash flow.
What is a Marketplace?
The marketplace, or market place, designates a platform linking Internet sellers and end customers. It is an operator through which various sales flows pass.
Marketplaces such as Amazon, Cdiscount, Rue Du Commerce, Rakuten or Fnac are responsible for recruiting merchants, offering their products on its catalog, referencing themselves to be visible and carrying out financial transactions for their sellers.
It is, in a way, a business accelerator for the e-merchant. Marketplaces boost its visibility, while offering efficient payment methods, an optimal delivery service, and solutions in the event of a dispute.
The strategic differences between marketplace and dropshipping
As you will have understood, marketplaces and dropshipping are not based on the same sales strategy. Moreover, it differs in many points, according to each model.
The actors of the sale
Marketplaces and dropshipping operate on a three-way relationship. Nevertheless, the actors in place and the markets are not exactly the same, even if the product remains at the center of the two types of sites.
In dropshipping, we talk about suppliers, online stores and customers.
In a marketplace, we talk about merchants, marketplace operators and customers.
Admittedly, this is a subtle difference. Nevertheless, these different actors do have very different roles. Unlike merchants, the market place business does not manage the content of the offer in place.
On the dropshipper side, this merchant is free to set up his prices according to the purchase prices he has negotiated with his suppliers . On marketplaces, it is constrained by a framework established by the company that offers its marketplace service.
The sales strategy
The main objective of the marketplace is to put the selling company and the buyers in direct contact . In dropshipping, the seller offers the product of his supplier under his name. These are two completely different processes.
The strategy is simple: the merchant present on a marketplace has his stock of items and simply takes advantage of the notoriety of a platform to be more visible. In exchange, he pays a percentage of his profits to the marketplace.
In dropshipping, the merchant is responsible for his own visibility and marketing actions . He simply delegates the logistics part such as the delivery of products to customers, and the management of orders and stock to his supplier.
The remuneration system
Regarding remuneration, the marketplace takes a commission on sales made through its site or sites.
On the other hand, the dropshipping merchant defines his own price and is paid by the margin he makes between the purchase price of the items from his supplier and the selling price he displays on his online store.
The relationship between the customer and the seller
One of the main advantages of the marketplace for products sold online, in addition to visibility, is based on its customer relationship management. Indeed, the platform manages the after-sales service itself.
In dropshipping, the customer’s main contact remains the seller . It is up to him to negotiate with his supplier if there is the slightest problem. Thus, it is essential to surround yourself with partners of choice to limit disputes and to build a solid marketing strategy to be able to anticipate customer expectations.
The legal part
Dropshipping is a commercial activity on the Web which is subject to the same rules as traditional e-commerce. I invite you to discover the article on the difference between dropshipping and e-commerce if you want to know more.
The trader can display his own legal notices, T&Cs and T&Cs on his site, without being obliged to mention information relating to his suppliers. At the same time, note that the regulations have changed slightly: since July 1, 2021, all products and services with a value of less than €22 from outside the European Union are subject to the VAT system.
For the marketplace, other additional rules are added. The platform must demonstrate transparent and clear information at all points. Thus, the legal notices of the platform must absolutely display the references of its various operators and third-party sellers.
The marketplace must also present all the contractual information related to the products and services it offers and for each of its sellers (except when it comes to B2B). Its site must also highlight its referencing and classification rules, as well as the conditions of access to the platform, the operating rules and the rates for linking the site.
The advantages of dropshipping over the marketplace
As you will have understood, the marketplace is subject to many obligations and is based on a more complex legal system than dropshipping. In addition, dropshipping also has several other advantages for the merchant… But as you will have understood, they are complementary.
You can totally have a dropshipping store and improve your visibility through marketplaces .
The diversity of dropshipping suppliers
In terms of dropshipping, the merchant is free to choose his suppliers as he sees fit. Thus, the choice available to him is almost endless.
Whether you want to work with European partners for more proximity or Asian partners for more competitive rates, you will be spoiled for choice!
Thus, you will undoubtedly have the opportunity to negotiate attractive purchase prices while surrounding yourself with partners that you have personally chosen.
Your shop is in your image
With dropshipping, you are not dependent on any additional brand. No one therefore imposes the slightest constraint on you, whether in terms of image or marketing.
You are free as the air and it is up to you to develop an online store that suits you!
When it comes to dropshipping, negotiation is a particularly important phase.
Indeed, it is at the time of purchase that you will be able, or not, to make significant savings. The more you buy your items at an attractive price, the more competitive you can be with your competitors . It’s up to you to set your own prices!
Likewise, it is an excellent opportunity to generate more margin and increase your turnover.
You don’t take care of the logistics
Finally, with dropshipping, you do not take care of all the delivery, stock and packaging part. This entire logistics process is delegated to your supplier . This is a considerable saving of time on a daily basis which will allow you to refocus on your core business.
Similarly, delegating this part of your work represents a significant financial gain, both in terms of immobilized inventory and maintenance or personnel costs. Dropshipping is a profitable business that still has a bright future ahead of it .
Dropizi is a dropshipping platform that accompanies you from A to Z in the launch of your project and in the development of your online sales site. Intuitive and ergonomic, our int