Turning Retail Risk into Reward
Inventory strategy may be the most important decision for retailers
Inventory is the risk of retail.
Carrying too much will cash-strap a brand, and erodes margin once inventory goes stale.
Buying too little dampens sales and artificially governs audience growth.
Those who have re-cast the inventory equation have created advantage. Dell was a darling in the 90’s and 00’s for selling before buying (or assembling). Amazon is closing in on 60% of unit sales from 3p sellers (per Marketplace Pulse).
The marketplace model proves compelling on the grounds of reducing a retailer’s inventory risk, while providing some revenue upside.
The latest marketplace metrics from Mirakl spell out the value of third party sellers - greater assortment, more choice, and real revenue contribution.
The last benefit - revenue contribution - provides an intriguing opportunity. With sellers (on average) contributing just over $20k in near-bottomline revenue, retail financiers can model the scale value of the marketplace function. And, when that model goes into the black, is there a profit pocket to be had?
Putting it all together, can the contribution provided by marketplace sellers throw off funding for testing into omnichannel or operational pursuits?
Whether delivering assortment for shoppers, profitability for the enterprise, or funding for what’s next, marketplacing has entered the conversation for brands and retailers to consider.