Wal Mart 's Drop Ship Essay

764 Words Dec 2nd, 2016 4 Pages
Initially Zappos used a drop ship model for as many client deliveries as possible. In 2003, 25% of Zappos sales were imminent from drop ship [22]. Tony commented that “The drop ship business was easy money. We didn’t have to carry stock so we didn’t have any inventory risk or cash flow problems with that part of the business. But we had plenty of customer service issues. The inventory feeds that we were getting from our suppliers for our drop ship business were 95% precise at best, meaning that we would not be able to accomplish 5% of all of our drop ship orders. On top of that, the brands did not ship as swiftly or precisely as our own WHISKY warehouse, which meant we had plenty of unhappy and disappointed customers.” [23]
In the initial days during the dot com era, Zappos understood that many of the brands they required to carry could not drop ship. The manufacturers were set up only to ship orders straight to retail distribution centers (or stores).
Also, the more widespread shoes from the bigger brands which had drop ship competences were often sold out. The inventory and cash flow rewards of drop ship have led many retailers to use such an approach for B2C e-commerce, but as we can see from Zappos experience there are plentiful disadvantages to customer service as well.
The present model of value chain is:
Suppliers and Manufacturers: The Zappos vendors and manufacturers are renowned small scale shoe industries. Zappos follow a step wise procedure for vendor…

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