PIECE OF CAKE: Food & Bev brands introduce dropship

Healthy choices play an increasing role in our diet. New research by the bakery brand Délifrance has found that more than four in ten daily bread eaters have switched to wholegrain, wholemeal, sourdough or seeded options.

This reflects a huge growth in the variety and quality of bakery products on sale in the UK to all age groups.

But it’s not just bakers who are adapting to changing consumer trends. All kinds of artisan and niche producers are helping to satisfy our search for foods and drinks with genuine provenance and stories behind them.

From coffees to crisps, cheeses to chillies, there are twists and alternatives on virtually all aspects of a ‘staple diet’.

Servicing this ever more discerning market are not only established producers but an army of startup manufacturers battling to differentiate themselves and land that hallowed place on the supermarket shelf or in the online catalogue.

Challenges

All retailers know that everything revolves around keeping the customer happy. They need the products they source from their suppliers to be delivered on time, every time, and be of absolute consistent quality.

If you are a niche food or beverage manufacturer looking to start or grow a retail network for your products, you face lots of challenges.

You’ll be committed heart and soul, typically working all hours of the day to meet deadlines.

You will most likely be a creative person focused on that all-important product quality but perhaps struggling to introduce processes that will make the business more efficient.

When it comes to the detailed daily grind of managing orders, shipments, invoices, delivery notes and so on, you’ll probably want someone else to either share the pain – or take it away altogether. That way, you stay focused on growing the business you love.

Going direct

More and more relationships involving retailers and manufacturers – particularly in e-commerce – are reliant on the supply chain approach known as dropship.

Dropship offers huge advantages for the retailer including no warehousing costs, the chance to offer a wider product range, and the ability to flex quickly amid demand fluctuations.

At the same time, the niche manufacturer can build a retail network through dropship by guaranteeing consistently good service and having strong admin systems in place.

Successful fulfilment requires the manufacturer to be continually plugged in. You must be able to manage hundreds or even thousands of discrete orders from consumers rather than bulk orders from your retailer or distributor.

Here are two examples illustrating dropship advantages, first, to retailers and, second, to manufacturers:

• Retailers – Instead of having to warehouse the products their manufacturers have supplied, the shipping – or dropship – is done direct from the supplier to the consumer. The retail brand remains highly visible through the ordering and delivery process but the consumer actually receives the product straight from the manufacturer. The argument is: who cares, as long as it’s what I ordered and it’s here on time?
• Manufacturers – Looking in the opposite direction, instead of relying on a wholesaler to manage the relationship with the retailer, the manufacturer adopts a dropship approach known as ‘wholesale bypass’. In this case, the manufacturer avoids the wholesaler altogether in order to retain the margin that would otherwise be given away. Wholesale bypass typically comes into play when the task is to fulfil smaller consignments ordered direct by the retail network.

In either scenario, it becomes essential for all in the dropship relationship to align robust IT processes.

The more this is done, the more mutual benefit you are likely to share.

Benefits

Planned and implemented properly, dropship can help the savvy manufacturer in a host of ways.

Chief among these is the potential for profit. New routes through a wider distribution network can help you ship more units than you would on your own website.

You also have the ability to test the popularity of new product ranges without having to gain space in a retailer’s warehouse first.

Dropship success is dependent on a good retailer-manufacturer partnership. That means excellent communication and reporting between everyone involved.

Looking across multiple industry sectors, recent research in the US has found that 71% of manufacturers say systems integration has improved dropship relationships with retailers

At Transalis, we’re all about providing robust IT solutions that enable 360^o real-time insight of stock, orders, invoices and other essential information.

In other words, we are an ideal partner for underpinning dropship success, whatever the sector.

So, for food and drink manufacturers, whether your ultimate consumers are vegetarians, pescatarians, flexitarians, or something else entirely, we have bags of experience and skills to help if you’re going for dropship.  

For more information on Transalis, call 0845 123 3476 or +44 1978 369 343 (for international callers), or email us on sales@transalis.com.