Philip Hall, MD of Europe for CommerceHub
CommerceHub helps retailers strategically expand their range through drop shipping while maintaining a brilliant customer experience.
Headquartered: Albany, NY
Customers: 12,000 retailers, brands and distributors
What does your company do?
CommerceHub is the first and only company dedicated to delivering enterprise-grade drop shipping.
What retailer problem do you solve?
In a recent survey, 75% of retail decision-makers said that adding more products or product categories to their ecommerce channels was a top priority for the business.
However, adding new products through the traditional route of buying them from brands and distributors and storing them in a warehouse, involves the retailer taking on a level of risk: the product might not sell, or it might occupy space that could be used by a more profitable product.
By using our drop-ship network, retailers can rapidly expand the assortment on their ecommerce sites, while maintaining a targeted customer experience. We help our customers to drive more than £17 billion in GMV annually across a network of 12,000 brands and retailers.
How do you deliver on this USP?
We work with retailers to define how they can expand their range in a strategic way, as we believe that very few retailers want to offer an endless aisle. We focus instead on “range intensification.”
Combining our platform with our in-house merchandising team, made up of ex-retailers who draw on insight taken from the unique vantage point of owning the largest multi-company ecommerce network, our comprehensive drop-shipping platform allows retailers to apply their high standards in areas such as fulfilment. We act as an ambassador for our retail customers and vet their suppliers to ensure that they understand and adhere to the retailers’ service level agreements. This ensures that the end customer doesn’t see any difference at all between owned inventory fulfillment and inventory free fulfillment. We combine this with a super-efficient onboarding capability in order to ensure the fastest growth and delivery of benefits for the retailer.
The end results for our customers is incremental revenue from inventory free products; moreover, there is a halo effect from offer in the customer a more compelling assortment, made sustainable by a great customer experience and the operational savings achieved from a more diversified and efficient supply chain. A survey of our customers showed that an ROI of 461% was achievable over a three-year period and payback on their CommerceHub investment can be achieved in less than three months (source).
Which retailers do you work with?
We work with many of the top names in retail, including Walmart, Qurate Retail Group (QVC) and Home Depot, to name a few.
Drop ship solves an array of problems for different retailers. Some of our customers want to offer a deeper range within an existing category; for example, being able to offer up to 30 different laptops, while only investing in stocking the two or three best sellers. Others use drop ship to expand into new adjacent categories; an electronics retailer, for example, wanting to get into mobility technology. More recently, we are seeing retailers use drop ship to get into the essential products game and attempt to relieve their supply chain by drop shipping big, bulky, expensive items with fickle demand.
“CommerceHub has been key to our success with supplier direct fulfillment (drop ship). We couldn’t have a better partner to ensure that with our increased business volume, we’re able to protect the customer experience while also exploring new avenues to ensure our growth continues…[their] continued support and partnership have allowed us to tap into areas we’ve never gone before in this business model, which is exciting.”
-A CommerceHub customer
What challenges are you addressing for multichannel retailers who aim to meet peak season demands?
COVID-19 has had a dramatic impact on ecommerce activity. We have seen an over 100% increase in year over year online order volume growth over the past 60 days. Despite this unprecedented and unforeseen spike in demand and massive interruptions to supply, across our network we have seen key performance metrics like fill rate, barely impacted, at 98%.
Our platform was purpose-built to withstand significant order processing volume, especially during peak season demands. Many of our customers will use drop ship as a way to “vent” their internal supply chains at times of high demand. The reason for this is that the capacity of manufacturers and distributors has greater headroom. Going forward, we will encourage our customers to add all seasonal products to their drop-ship programme.
What do you see as challenges for the retailers and suppliers over the coming years?
We expect to see an increase in volatility in both demand and supply. We also anticipate the acceleration towards ecommerce to continue. Some analysts are now predicting that COVID-19 has kick started an upswing, such that by 2025 ecommerce will exceed 50% of all retail sales (source).
Once retailers have worked out how to get to the other side of this, we think the industry needs to look at how to build more agility and diversity into the supply chain. The crisis has exposed some narrow points of failure and drop shipping will be one way to make this more robust.
Retailers struggle to compete with the range, economies of scale and service capability of marketplace providers such as Amazon. As the leading digital supply chain experience platform for enterprise retailers and brands, CommerceHub will continue to help retailers take the fight to Amazon and other marketplaces. We will broaden our reach beyond drop ship, using our experience and capabilities earned in the tough direct to consumer delivery space.
What targets are you aiming to achieve in the next five years?
In EMEA, we will pursue the same goal as we did to achieve pre-eminent position in the US. We will focus on building new strategic partnerships with retailers and brands (collectively known as “the digital winners”) through demonstrating the competitive advantage we can deliver and then by focussing obsessively on their growth and success.