Ideas and Validation October 23, 2020

Dropshipping v Marketplace

rab

Would you rather create and run a B2B dropshipping company or a B2B marketplace?

What are your reasons?

Which would you create & run
  1. B2B Dropshipping
  2. B2B Marketplace
Vote
  1. 2

    Personally, I think the drop shipping model is a bit risky.

    I know there are many that do it, but knowing what I know after running an online B2C business for the last 12 years, I wouldn't personally do drop shipping.

    That said, I do like the idea of a marketplace better, because you're just facilitating a transaction btw two parties. You're not involved, other than hosting the platform, and driving traffic to it. If there's an issue with the transaction/purchase, it's between the buyer and seller -- and you're out of it.

    There are several marketplace SaaS services available, and I suppose you could utilize those for B2B or B2C marketplaces.

    I'm contemplating adding a B2C marketplace on one of my sites, so I'd vote for the B2B Marketplace.

    1. 1

      Thanks @iammike.

      Interesting you're considering to implement. Agree marketplace host is distanced in involvement, liability & reputation (verses dropshipping which needs watertight suppliers).

      We've assumed commission-based payments with money flowing through us, so will need some involvement especially for refunds. Have been looking at Amazon FBA and FBM as reference.

  2. 2

    B2B Marketplace, because there is more long-term value:

    • more potential for user lock-in
    • the bigger you grow, the more difficult it becomes to compete with you
    • you're not reliant on 3rd parties for fulfillment

    But, B2B Marketplace is hard to launch and it take a long time to grow.

    So I guess depends on what your goal is.

    1. 1

      Thanks @farez. Goal is to become "one stop shop" in niche. Reputation & liability flow from dropshipping suppliers is a concern. Perhaps there is a path from dropshipping with hand-picked suppliers to marketplace if sufficient buyers and sellers found. Thanks for your thoughts.

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