Before the days of simplified eCommerce set-up, wholesaling was a brand’s best bet for success. Through the wholesale model, brands could source and craft quality products, plan manufacturing & cash flow, build a brand reputation and then use that reputation to place their items in larger chain stores – both brick & mortar and digitally. As an outcome, brands could build a loyal clientele and assist retailers in doing so as well.
Brands would sell their products at wholesale prices, and retailers would buy the products in bulk at a lower price. Wholesale strategy works great with brick-and-mortar stores or across online marketplaces, although it is limited. And with eCommerce growing at crazy speeds, brands needed to supplement their wholesale strategy to scale their digital sales. Many of the fastest-growing and most popular brands gained their fame exclusively online through both wholesale and drop ship.
“Cymbio was the secret tool that allowed our company to meet revenue and profitability goals despite facing the most challenging year in business.
I remember initially being hesitant to adopt their system out of concerns of potentially losing the “much needed” department store budget. However, once implemented — which was a seamless process — we achieved triple-digit online growth with the same partners.
In addition, the broader assortment allowed us and our retail partners to identify the next generation of bestsellers. By using a more data-driven methodology, we were able to aggressively introduce high-performing styles to more doors at retail.
It’s clear that without business innovations such as Cymbio, brands will be at a disadvantage against their competitors and will be at risk of losing revenue.”
Raisa McDowell (Director of Sales for Melissa Shoes, USA)
Melissa launched the Frozen sandal back in September 2019 on Nordstrom. With drop ship, Melissa was able to maximize sales by turning feeds on before orders were received to the warehouse, as well continuing to sell without any breaks once a size or style sold out.
Wholesale is great for many reasons. The thing is, many brands stop there. Let’s discuss how drop ship compliments your eCommerce strategy and business.
- Drop ship is the perfect way to test different styles that buyers are unsure of. Once the style starts selling, you’ll have the data to speak for itself and can suggest bringing in more variety through wholesale and in-store.
- Drop shipping allows you to broaden your product assortment and provides a more prominent presence of your brand on the retailer’s website.
- You’ll be able to test new categories.
- Time to live is exponentially quicker.
- Drop ship allows you to react to trends quickly, in real-time, for example – if combat boots are trending although the buyer didn’t purchase this item, you’ll be able to sell them MUCH faster through drop ship.
- Overcome Open-To-Buy (OTB) – buyers are limited in OTB, and drop ship allows them to showcase more products. It is much more profitable to have 40 overall styles with 20 on drop ship than just 20 styles through wholesale.
- Time-To-Market – you’ll be able to have all styles set up for drop shipping prior to your shipments arriving, so as soon as the goods hit your warehouse, you can start selling versus waiting for the orders to be shipped and processed to the retailers’ warehouse.
- If a style sells out, you can quickly flip to drop ship while you wait for the re-order to be shipped and processed (if the retailer supports this). Essentially you’ll save sales for those few weeks as the reorder is being processed.
- Drop ship allows you to test and add additional colorways of specific styles and items.
In a fast-paced business, being able to scale quickly and multiply your money, time and effort is a massive win for your business. By offering drop shipping to wholesale customers, you’ll be able to prioritize establishing relationships with these buyers and grow your rapport and reputation. Drop ship brings the power back to you as a brand and enables accelerated growth. So what are you waiting for?
Grow Your Business Through Drop Ship AutomationTELL ME MORE!
As childhood best friends, Mor Lavi (Co-founder & COO), Roy Avidor (Co-founder & CEO) and Gilad Zirkel ( Co-founder & CTO) decided to start a company that helps consumers find the products they love, always in stock. Together, they developed a patent that makes this continuous discovery possible. Major brands were eager to participate in this initiative; however, they expressed an even stronger desire to control the distribution of their goods. The team decided to focus on this path and built the Cymbio we know today – the first BRAND-centric platform that enables brands to sell and manage on digital sales channels with all retailers and marketplaces.
Today, we’re proud to announce our Series A funding round of $7 million, led by Vertex Ventures, with participation by Yuval Tal (founder of Payoneer) and existing investors Udian Investments and Ron Zuckerman.
The funds will be used to scale R&D, sales, marketing and success teams in addition to growing the company’s global footprint (currently supporting brands and retailers in the US, Canada, Europe, Australia and Singapore).
THE INCREASE IN ECOMMERCE AND DROP IN BRICK & MORTAR RETAIL
For brands, no matter their size, today’s retail landscape requires them to manage dozens, if not hundreds, of digital sales channels. Setting up and connecting to each marketplace and navigating retailers’ systems and requirements, while also managing the daily operations with each channel, is a significant challenge and very time-intensive. The increase in eCommerce and drop in brick & mortar retail – a process accelerated by COVID-19 – has further forced brands to transition to a digital sales strategy. This transition requires brands to have efficient and timely marketplace and drop-ship integrations and the ability to manage operations at scale, allowing them to attract new customers across a variety of sales channels.
ONE HUB, ENABLING “PLUG & SELL”
We provide a platform to brands, such as Steve Madden, Marchesa, Camper, Micro Kickboard, and hundreds of others, that connects them directly to their retail partners, enabling a true “Plug & Sell” reality. Our technology automates all drop ship and marketplace operations for brands with any retailer, including the complete set-up, integrations, onboarding and daily management of streamlined product data, imagery, mapping, taxonomy, inventory syncing, orders, billing, tracking, returns, reports and more.
With brands and retailers using different systems and processes, the integrations and operations of brand-to-retailer connectivity have always been a struggle and a significant bottleneck for increasing sales channels. Each retailer requires unique specifications, which creates lengthy integrations, tedious manual work on product content, imagery and processes. With Cymbio, one quick connection instantly enables brands to start selling through a global retail ecosystem of hundreds of marketplaces and retailers.
A FUTURE OF CONTINUED GROWTH AND INNOVATION
Throughout 2020, Cymbio experienced rapid growth, increasing its customer headcount 12X, with brands of all sizes, from small to enterprise brands, in fashion, apparel, footwear, home, beauty, cosmetics, jewelry, kids, toys and more. Using Cymbio, customers cut the amount of time it takes to go live on a new marketplace by 91%, have experienced an average digital revenue increase of over 65% and an increase of 47% in average units sold. Cymbio currently supports more than 600 retailers, marketplaces and department stores across the US, Canada, Europe, and APAC.
“Cymbio is all about empowering brands and helping them grow. Our ability to connect with all systems and protocols supports brands with the needed speed to go live with multiple retailers, and our automation platform enables brands to support marketplace and drop-ship operations at scale,” said Co-founder & CEO Roy Avidor. “The growth that we have seen over the last year hints at the market need for a platform such as ours, and we are going to double-down on our efforts to help brands of all sizes reach their customers wherever they are.”
“We believe deeply that Cymbio’s technology will fundamentally change the game for brands that sell online, making long, cumbersome integrations a thing of the past,” said Emanuel Timor, General Partner at Vertex Ventures Israel. “More than just an incredibly disruptive technology – the Cymbio team is world-class, and we are excited to work together as partners as Cymbio ushers in a new reality for the online retail industry.”
“Cymbio is redefining a new category in eCommerce logistics, similar to what SAP and Salesforce did for ERP and CRM,” said Yoav Sebba, Managing Director of XT Hi-Tech and board member. “We supported this exceptional team from almost day one, and it’s great to see the hard work turning into happy customers, attracting new value and partners such as Vertex.”
As the new funding propels us forward, we are incredibly grateful for our stellar team and dedicated Cymstars, and of course, our customers, partners and vendors who clearly see into the future of connected commerce – we are thrilled to be on this journey with you! ❤️What is the Difference Between Drop Ship and Marketplace?
There is no denying that eCommerce is here to stay. In fact, COVID has only further enhanced brands’ interests to expand their digital sales channels. Just this past year, eCommerce grew over 44% as consumers shifted their buying power online. Brands have been forced to alter their strategy in hopes of placing them where their customers are: on digital retailers. While deciding which channels might be the right choice for your brand, you may have also contemplated both drop ship or marketplace models, and which is the right fit for your business.
Let’s take a deeper dive into these two models:
What is Drop Shipping?
Drop Shipping is a retail fulfillment method where a store (such as an online retailer) does not keep the products it sells in stock. Instead, when a store sells a product using the drop-shipping model, it purchases the item from a third party and has it shipped directly to the customer. As a result, the brand doesn’t have to handle the product directly.
How Drop Shipping Works:
- A customer places an order for a product on the retailer’s online store.
- The retailer forwards the order and shipping details to the drop ship supplier.
- The drop ship supplier packages and ships the order directly to the customer in the retailer’s name.
As a result, the selling merchant does not stock or own inventory. Instead, the seller purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.
Benefits of Drop Shipping
Drop shipping is a great business model because it’s accessible. With drop shipping, you can quickly test different products and channels with limited downside, which helps you learn a lot about how to choose and market in-demand products. Here are a few other reasons why drop shipping is such a popular model.
- Speed and visibility – Quickly and effectively feature many products on multiple channels.
- Easy to get started – Cymbio enables seamless brand-to-retail connectivity. Automating the complete retail set-up, onboarding and daily management of processes.
- Widening your product assortment with each retailer- You can feature a broad assortment with a variety of department stores and drop ship programs.
- Reach new and different audiences – Each channel provides your brand the opportunity to widen its reach and gain a variety of new customers.
- Marketing expenses – Selling on marketplaces naturally expands the reach of your brand with no added marketing expense.
What is a Marketplace Model
Online marketplaces connect buyers and sellers on a proprietary platform. Often, the marketplace operator does not hold or own any type of inventory but helps the buyers and sellers to facilitate a transaction.
How a Marketplace Works:
- The brand is the seller to the end consumer. The end consumer understands it is coming from the brand (manufacturer, wholesaler, another retailer, a mom-and-pop seller, etc.)
- From the customer POV, the box came from the 3rd party brand, even though the customer purchased on another site (e.g., Amazon).
Benefits of Selling on a Marketplace
- They are very popular – Whenever people buy online, there is a huge chance they will go to a marketplace.
- You get instant reach to millions of customers – When you start selling your products on a marketplace, you get automatic access to all its customers without having to spend any money on marketing.
- You benefit from the reach of the marketplace – In a marketplace setting, you only need to worry about the internal rankings – you don’t need to convince any customer to come to your actual D2C website.
- Built-in global market – A lot of marketplaces operate internationally, so you’ll be able to instantly expand your reach.
5. Starting is simple and quick
Cymbio is the technology bridge between you (the brand) and retailers. We enable the complete set-up, onboarding and daily management of streamlined product data, imagery, mapping, inventory syncing, taxonomy, orders, billing, tracking, returns, reports and moreLEARN MORE
- Testing ground – You’ll be able to sell products that you have a surplus of or introduce new items and styles.
- Expand your niche – You will find different types of people browsing your brand which could expand your customer base to additional customer types.
- Marketing expenses – Selling on marketplace naturally expands the reach of your brand with no added marketing expense.
The Difference Between the Two
The main difference between these two models are 5 core elements: What is your margin for each sale? Who handles customer support, returns and taxes, and who is in direct contact with the customers?
- Drop ship – The margin is usually the wholesale price which is roughly 50% of the retail price.
- Marketplace – The brand is the seller and sells directly to the consumer. The brand completes 100% of the transaction and pays a small fee to the marketplace (usually between 5-20%).
- Customer Support
- Drop ship – The retailer is in charge of providing support to the customer.
- Marketplace – The brand offers support to the customers.
- Drop ship – The merchant of record is the retailer. The retailer handles the returns and usually sends the items back to the brand in bulk. The merchant (in most cases) creates the return labels and takes care of support.
- Marketplace – There are a few options, but in most cases, the brand governs the complete process. The brand provides the return guidance and support, along with product return labels.
- Drop ship – For example, in the US, there are no taxes between the brand and the merchant (B2B transaction) on the wholesale price.
- Marketplace – The brand is responsible for taxes even though many marketplaces assist the sellers and remit the taxes on their behalf.
- Who is in direct contact with the customer?
- Drop ship – There is absolutely no access or direct contact with the customer.
- Marketplace – The brand is the seller. There is also visibility and ways to communicate with the end customer.
Both drop ship and marketplace models provide excellent reach. It’s about selecting a model that fits your company’s goals and resources and provides the experience you want to deliver to your customers. You might also decide that working with both marketplace and drop ship, is the right choice for your brand and provides the reach necessary to grow your business. Whatever you choose, we are happy to connect you with the most fitting retailers for your brand’s DNA, increasing your digital sales channels, and supporting you every step of the way!