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There is one key difference. Physical goods. The logistical challenges of warehousing and shipping physical goods reliably, quickly and with the added complex
by fookyong 16y ago
There is one key difference. Physical goods.
The logistical challenges of warehousing and shipping physical goods reliably, quickly and with the added complexity of the fact that every day you are dealing with around 100 brand new SKUs that will only be sold for that day... are significantly higher than delivering a virtual coupon to a customer via email. Significantly.
That is why there are many, many Groupon wannabes, and decidedly fewer Gilt wannabes.
- unohoo 16y agoactually, they're not that bad for gilt/hautelook etc. if you compare them with other online retailers. Most of the flash sales sites use some sort of dropshipping (brand / manufacturer ships goods to gilt/hautelook and they ship to customer after sale is over) -- contrast this with other retailers where a lot of them stock inventory before hand.
- fookyong 16y agowell, I do have something of an insider perspective - my startup is in this business :) most flash sales sites will do a mix of warehousing and dropshipping depending on brand. it's faster to ship with warehousing so obviously for popular brands it's better to warehouse (your customer gets their order quicker). dropshipping has other benefits such as managing risk, but brings with it logistical problems e.g. the possibility that you could PO for stuff that doesn't exist because of a mess up earlier in the process, and then you have to explain to customers that sorry there was only 4 pairs of those shoes not 5, and you don't get yours - entirely possible when you work with a different brand (small/large companies) every day. I can tell you that despite the lack of need for warehousing, dropshipping still brings with it many logistical problems of its own!