A: Drop shipping is becoming more competitive because companies are so crunched for margins. If businesses think about drop shipping more strategically and consider where drop shipping can provide the best opportunities, it will exist for a while.
Drop shipping may come into play more if physical stores start holding less inventory onsite. There are now experiential stores with extremely limited inventory. Customers can come in and try on a shoe or a piece of clothing, then order online directly from the store. This opens up an opportunity for digitally native companies built on drop shipping to set up physical stores, because they don’t need to hold the full inventory and can still use drop shipping to deliver products. As long as drop shipping is included in omnichannel experiences like these, it will continue to exist and work for businesses.
And with artificial intelligence (AI), companies can start incorporating better forecasting into the relationship between supply and demand, between the retailer and the drop shipper. They will be able to predict in a more accurate fashion what is going to sell and when, so that the supplier will understand how much product they need to have on hand. In that scenario, AI helps the drop shipper lower their costs and manage their inventory better. That could then be passed on to the retailer and then lower costs for consumers.
Another potential benefit of AI will be intelligent sourcing. A drop-ship supplier could have warehouses in multiple different regions and geographies, so having intelligent sourcing algorithms that let these suppliers know the best way to fulfill a specific order based upon the promises that were made to the customer could also be a possibility.