How drop shippers are changing the retail business catalog & landscape?

(Picture courtesty- Brightpearl)

While growing young I used to walk up to the grocery store, just round the corner. I used to carry a list in my hand where mom would list all the things which we needed. The grocery shop guy was hard working chap, but he was smart too, I learnt years later. Here is how. 



With the list given to him, he would start adding items in a basket. Sometimes he would not be carrying a certain product in his story or would run out of it. Say 'fresh bread'. He would send his boy to the next shop and get that for me. This way I always returned with whatever was on the list. 
Circa 2013 and we are already dealing with new trends in on-line shopping. What in those beautiful Web pages you may not realize, are those simple concepts picked from regular life. 
From the example seen early, there are so many business models, which have evolved with time.

Drop-shipment is one such thing. In simple terms, retailer tries to fulfill your needs and if not by themselves directly, then by bringing on a 3rd party.
The model has caught up over a period of time, and now sees lot of changes coming across assortment planning. The experience by which the user buys and businesses sell products, have changed. Thanks to the tremendous on-line growth and thanks to technology.

Key benefits of drop-shipping:
1. Bigger catalog. It means more needs could be satisfied for your customers.
2. Inventory. You don’t have to stock everything with you. Prioritize and keep the best selling with you. Slow movers, expensive units could be potentially drop-shipped, saving your company millions.

Key Challenges:
1. Assortment planning & Drop-shipping strategy.
2. Creating eco-system from ordering via on-line/stores/mobile to delivery to return and funds processing.
3. Reconciliation of total sales, total returns, margins etc between businesses on closing the books can be a huge effort.
4. Bringing on-line Drop shippers and maintaining contractual SLAs.