Hi all,
I said I would provide my view on how I think DW8 could be adopted by retailers rather than contested. Thought it would be best to start a new thread and that way everyone can discuss my view and get a healthy debate going. Since the industry can be quite diverse in supply chains (large retailers, small retailers, independant businesses, restuarants, bars etc.) I decided to keep it simple and focus on one large retailer who people tend to bring up a lot in these forums, Dan Murphy's.
Here is a really simple diagram I made for how Dan's get their stock:
Currently, Dan's will buy most of their stock via a REP company. Some wineries may deal directly with Dan's, but this is less common. The stock is purchased up-front and transported to one of their distribution warehouses until ready to go to store or purchased online via their website. The cost drawbacks of this model:
- REP company who manages wineries takes a cut, adding margin to the cost of each bottle
- Transport costs of getting the stock from the winery to the warehouse
- Storage costs to keep the stock in the warehouse until it's needed
- Transport or delivery cost (if purchased online) to get the stock to the store / customer
Now look at this simple diagram involving DW8:
As DW8 plans to be the middle man between the winery and the retailer, we see a much simpler flow (focusing on the online component). Acting as a dropshipping service for the retailer, DW8 deals with the winery, stores the product and ships the product. So a customer can jump on the Dan's website, buy stock and Dan's don't even have to lift a finger, DW8 will pack it and send it on their behalf. The pro's of this:
- Cost saving on transport of product by retailer
- Cost saving on storage of product by retailer
- Cost saving on staffing to move, pack and ship stock by retailer
- Minimise delays in distribution flow, now that the product is already with DW8 from the winery and going straight to customer
- Less overheads of managing online store as DW8 take care of everything, Dan's just make sure the website is working
- Retailer does not need to buy stock up front before selling it
Now, in this ideal world scenario there would need to be a bit of setup between DW8 and the retailer (eg. integration between website and DW8).
However, considering the dropshipping style approach they are bringing to the industry to shakeup distribution from winery to customer via retailer, does anyone else agree this is a possible future outcome?
GLTAH
