How to manage inventory accross the different marketplaces?

Regarding stock, the main question is which stock model is applied in the cooperation with an external marketplace. We can distinguish the following models:

 

  • Wholesale: the platform is buying stock, takes the stock risk and delivers to the consumer
  • Drop shipment: the platform receives the order, but dispatches the order to the stock-keeping seller. The seller will execute the delivery to the consumer.
  • Consignment: the platform stores the items and executes the consumer delivery, but the stock ownership and risk remains with the seller until it is sold to the consumer.
  • Cross-dock: the platform receives the order, but will receive stock from the seller after a consumer order has been placed. The platform will then take care of the consumer delivery and bundle items with items from other sellers if requested.

 

The above models may be used in a mix-form as well. For example: items with a high stock turnover are stored at the marketplace warehouse, whereas the so called long tail items remain with the seller until they have been sold. Also regarding stock ownership and risk, mixed models appear. As an example, parties may use a wholesale model, but agree that the seller will take back a percentage of the unsold stock as a means to share some risk.

 

To determine the best suitable stock model, a number of aspects must be taken into account. Some of these aspects are:

  • Stock turnover
  • Stock value
  • Number of “combined orders” (with items from multiple sellers)
  • Required speed of delivery
  • Logistic capabilities of both parties
  • How fashionable the products are
  • Level of IT integration

Philips is an example of a company that cooperates with several marketplaces in multiple countries. To support its countries in finding the correct partnership, Philips uses the model shown below. On the basis of four separate roles, sixteen different cooperation forms can be distinghuised. Philips chooses which scenarios can be developed in other countries (such as the B2B e-commerce portal), and which should be used as a pilot (such as omnichannel branded stores in eBay).

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