For most brands on Shopify, the idea of letting dropshippers sell your products is enticing. The dropshipper puts in all the heavy lifting with marketing your products and handling customer service with you only focusing on fulfillment. This allows you to leverage a growth channel that theoretically grows your brand. It sounds great, right?
It is, but we believe dropshipping is fundamentally broken in today’s ecommerce market. While it had its moment, dropshipping is no longer a sustainable strategy for brands that want to grow in today’s increasingly competitive ecommerce industry. Just because your products are more readily available for sale by other retailers doesn’t mean you’re going to see growth.
There are a few reasons why we think dropshipping is fundamentally broken for suppliers. These reasons include:
- No control over the customer experience
- Dropshippers aren’t guaranteed to deliver great customer service thereby making your products look bad
- Dropshipping is saturated
- High shipping costs
- Low margins
It’s why we think Cross-Store Selling is a much better alternative to dropshipping for Shopify stores. Instead of letting unknown brands sell your products, you can partner with proven brands to create a win-win situation for both parties.
For suppliers, Cross-Store Selling and dropshipping have some similarities. The retailer doesn't actually hold the inventory, and the supplier fulfills the order. But there are some details that make Cross-Store Selling a better experience than dropshipping.
In this article, we'll discuss why dropshipping is no longer a solid strategy for ecommerce retailers and why you should think about Cross-Store Selling as a much better alternative. This post is meant for ecommerce retailers who want to grow their brand by leveraging the power of Cross-Store Selling.
There are some benefits to dropshipping
While we admit dropshipping is fundamentally broken, it does have some benefits. Dropshipping lets Shopify stores sell more products to their customers without having to buy more inventory or develop new products.
Before dropshipping, Shopify stores carried as many of their own products as possible in their warehouses. It limited the amount of products they could sell because they’d have to spend tons of capital on developing new products.
With dropshipping, retailers can offer their customers a wider range of products without worrying about inventory costs. It also lets them offer product substitutions, such as multiple listings for the same type of product, so they aren't too dependent on one product or brand.
No inventory risk: Since retailers don't keep their own stock when they dropship, they don't run the risk of having unsold stock if a product doesn't sell (more on this here).
Overcome forecasting limitations: The retail wholesaling model constrains retailers to their forecasts' accuracy. Over-buying and under-buying inventory affects the capital efficiency of the business. With dropshipping, retailers don't have to worry about getting their forecasts right. As long as a brand has inventory of an SKU, they can sell it.
Extension of the retailer’s brand: Dropshipping gives retailers control of all the touchpoints in the customer journey. For example, the retailer handles those requests if you need help with a dropship order.
So dropshipping does have some benefits. But the drawback to dropshipping is that it pales in comparison to Cross-Store Selling.
What is Cross-Store Selling?
You might know Cross-Store Selling as brand partnerships where two brands team up to promote and sell each other’s products. With Cross-Store Selling, your brand can sell products from other brands (and they can sell your products too). With this kind of sales channel, your brand suddenly becomes the go-to destination for products similar to Amazon. Turning your store into a digital mall keeps customers returning and lets you build a high-quality marketplace with products that Amazon doesn’t have. Cross-Store Selling has you covered if you’ve ever wanted your store to become the lifestyle brand for your niche.
How Cross-Store Selling works
To show how Cross-Store Selling works, let’s use the example of Blendjet. Blendjet sells a blender, but did you know most of the products on their site are from other brands?
With Cross-Store Selling, Blendjet put together a highly-curated marketplace. But unlike Amazon’s bloated SKUs, the products Blendjet promotes products are much more likely to be seen.
Here’s an example of how Blendjet handles Cross-Store Selling. Blendjet teamed up with The Original Green Pan on Instagram to promote each other’s products. Don’t you wish your Instagram posts had over 11,000 comments?
The orders that are sold through Blendjet are fulfilled by the supplier. Here’s how it works:
- The customer places an order for protein powder on Blendjet’s site.
- Blendjet deducts a % commission of the payment for the order. It sends the order and the remaining payment to the supplier. The supplier receives it as one of its own orders.
- The supplier packs the order in their packaging and ships it directly to the customer.
- The customer receives it as if it came from the supplier.
Benefits of Cross-Store Selling for Shopify stores
Cross-Store Selling offers similar benefits to dropshipping, like expanded product assortment and no inventory risk. However, there are benefits that dropshipping doesn’t provide:
- Easier brand partnerships: Retailers with successful marketplaces have large audiences that brands want to get in front of so that they can acquire new customers. Brands can also control pricing and promotions for their products, which is another reason it’s easier to partner with them.
- Minimal customer support: In a Cross-Store Selling model, brands handle the bulk of post-sale customer support.
- Limited effect on the retailer’s brand: Brands position themselves according to their unique value proposition on a marketplace. Retailers don’t need to make brands adhere to their voice and tone — they can focus on product discovery through recommendations for customers.
How Cross-Selling Compares to Dropshipping
The main difference between these two models are for core elements: What is your margin for each sale? Who handles customer support, returns, and who is in direct contact with the customers?
How Carro makes Cross-Store Selling easy
Carro is the most established Cross-Store Selling platform for Shopify merchants that’s proven to work. Some of the results that brands have gotten working with Carro include:
- AOV increases up to 80%
- 3x revenue increase in 6 months
- 3x SKU count in one year
Here’s why you should use Carro to implement Cross-Store Selling for your Shopify store:
Get discovered by customers from other brands
With Cross-Store Selling, you can work with 30,000+ brands to offer your products to a wider audience. You have full control over who you partner with, or you can use auto-approval so any store can add your products.
"In addition to a nice contribution to the bottom line, it was also one of the most highly-engaged social posts for the year."
David Krimper, Director of Ecommerce, Manduka
Fulfillment is handled for you
The beauty of Cross-Store Selling is that you don’t have to house the products for other brands in your warehouses. Orders are automatically sent to the brands so they can handle fulfillment themselves.
“Before we joined Carro, we had put our company on the market. We thought we needed capital to expand our traditional wholesaling. Now, we’re able to meet our goals without having any cash come out of pocket. We’re tripling and quadrupling the numbers of units that we move because we have access to so much more inventory.”
Amy Richardson-Golia, June & January
Grow AOV, LTV, and retention
Perhaps the most exciting reason to leverage Cross-Store Selling is that it’s the best strategy for growing your Shopify business in the long run. By working collaboratively with other brands, your brand will set itself up for success. Your Shopify store will become THE destination for your niche. If you sell beauty products, Cross-Store Selling allows you to grow your product listings so your customers keep coming back for more.
One of the best reasons to shop on Amazon is convenience. Being able to buy everything you need in one place is a powerful motivator. Wouldn’t you love it if your Shopify store was the go-to place for your customers’ needs?
"Take my word for it, if you install Carro, you are going to see what I’ve seen. Which is a dramatic increase to average order value, especially on orders that contain Carro products, which for us is over 80% increase to AOV. "
Ryan Pamplin, Founder & CEO of Blendjet
To learn more about how Carro can help your Shopify store grow, check us out on the Shopify App Store.