Retailers everywhere have been hit hard by the supply chain crisis, and it looks like it's here to stay. On top of unprecedented demand for inventory, warehouse vacancies are at a historic low, and freight costs have skyrocketed. For ecommerce brands looking to expand their product catalog, the setup costs for developing and launching new products in-house have never been higher. The solution? Expanding your product line without holding inventory. In this post, we’ll dive into traditional practices like dropshipping, as well as a new alternative to expand your product catalog.
What is dropshipping?
Dropshipping is an easy way to expand product offerings by sourcing products from wholesalers. In dropshipping, retailers don’t hold inventory and instead act as a middleman, listing the products on their site and then passing orders to the supplier to be fulfilled. Dropshipping suppliers are typically either manufacturers or wholesale distributors.
How to start dropshipping
Dropshipping can be facilitated through apps that connect wholesale suppliers to the seller on ecommerce platforms like Shopify. Typically, dropship products are unbranded and sourced from manufacturing companies or massive wholesalers like Alibaba. For the retailer, dropshipping can be an easy way to avoid the overhead outlay required to hold a product in stock: orders are routed on-demand and product ships as needed from the supplier.
Problems with dropshipping
While dropshipping can be a low-overhead option, it comes with some issues. Because setting up dropshipping is so easy, there are an abundance of stores offering the same wholesale products to consumers at low prices. This makes it difficult to capture market share and maintain profit margins.
For businesses looking to create an exceptional customer experience, dropshipping can also be risky because products from wholesale suppliers are packed and shipped separately. For low-cost wholesale products, there’s little ability to add your branding or name to the product. Overall, dropshipping cheaply made and unbranded products can make for a sub-par experience for your customers.
How to Use Canal to Sell Products online without inventory
Canal is designed to fix the trust issue inherent in dropshipping from a wholesaler by eliminating the need for sketchy wholesale or direct-from-manufacturer products. Canal’s Shopify app routes all the right information from store to store, meaning you can add products from brands you know and trust to your online store without making a large purchase order or holding inventory.
Once you’ve chosen the right product for your audience and brand ethos, it’s easy to create collections and bundles that suit your customer. The result? Bigger cart sizes and customer lifetime value without the overhead of inventory.
Ready to add products to your store? Use the Canal Shopify app to get started with your existing suppliers, and join the waitlist to access our vetted network of brands and products.