Drop Shipping and exclusive contracts

The exclusive contracts in DropShipping could represent a very interesting topic for the evolution of this type of trade.

The market is increasingly saturated with online commercial offers, and in certain markets the comparison with competition is too direct. Think of Amazon, where the product page is unique and only those who win the Buy Box sell; the war of the lowest price unfortunately does not benefit anyone, because in the end there will be a winner, but at what price? A low price and a reduced commercial margin will only benefit the consumer and the marketplace or advertising companies, but not the seller, who will work to earn (too) little.

Seen from the point of view of the online seller, of course there can be much interest in obtaining an online exclusive contract. The exclusivity can be more or less broad, depending on the agreements: for example it could refer to all the marketplaces of a nation (for example for Italy, eBay.it, Amazon.it, ePrice.it), or to a marketplace at a regional level (the 5 European Amazon sites), or at a given global marketplace (all eBay sites in the world) to achieve a complete exclusivity, including websites and social networks. Of course, a variable to consider is the duration of the contract: the exclusive contract could be granted for a limited period, at the end of which it is possible to evaluate the possible renewal (or not) depending on the results achieved by the seller.

It is important to point out that here we are talking about exclusive dropshipping, not absolute online selling, because it is difficult to prohibit to a company that has bought some goods, to be able to sell online (as-as they are trying to make the big luxury brands, to try to stem the removal of their name from the common idea of ​​exclusivity).

But why should a producer agree to offer only to someone a DropShipping service?
Meanwhile, it is highly unlikely to be able to reach this type of agreement with large companies, which have all the means to manage the global online trade of their products, being able to rely on teams of dozens of operators experienced in marketing and sales.
It will be easier to sign exclusive contracts with smaller companies, with a structure oriented to production and wholesale, where organizing a serious international online business could become too heavy a task, and instead it could be easier to manage good business agreement with a company already structured and with a good experience in online sales, without having to make investments to structure your company.

What could he then ask in return for a producer or distribute in order to grant an exclusive contract?

Here are some hypotheses, which could be considered. There are no standard rules as much depends on the strength of the 2 parts, for example the degree of exclusivity of the products, the level of discount (commercial margin), the experience and current market penetration of the seller, etc ...

A first case is that in which the manufacturer can grant the exclusive without asking for any kind of compensation in return. This case could occur in the case of partial exclusive contracts (eg on a single country or a single marketplace) or totals, stipulated between a small producer and a very experienced online seller, able to provide for large sales invoicing multiple sales channels.

The second hypothesis is that in which the producer or distributor requests an economic remuneration commensurate with the commitment (duration and extent of the exclusive contract). The fact that an online seller accepts to pay in order to obtain the exclusivity of a given supplier of products (regardless of the amount) can be seen as a very positive factor, as it announces a greater commitment, which instead not all sellers could offer.

Then we deal with other hybrid cases. For example, you could find a barter situation between the parties. For example, the online seller could offer the creation of the manufacturer's Internet site, which is useful for this in order to improve its traditional wholesale business. The online seller could be a company specialized in the development of Internet sites, and the development of a site for the manufacturer could also be a synergistic action with the new online sales of its products, as the online presence of the site of the producer could increase confidence in the potential online buyer.

 

We have reached a historic moment in online commerce where a methodological change takes place. Not all sellers can be winners; a natural selection will bring out from the market those companies that face online sales with a level of professionalism that is too low and without a true entrepreneurial approach.

DropShipping.one aims to bring together online sellers with manufacturers and distributors, highlighting which of them are available to accept commercial exclusive contracts.