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Mirakl Assortment Strategy Webinar Slides
The document discusses strategies for expanding ecommerce assortments through dropship and marketplace models. It provides a step-by-step decision process for determining which model is best for different brands, categories, and products. Key factors include brand requirements, existing wholesale relationships, catalog coverage, and profitability analyses. The document also compares the profit structures of different models using mattresses as an example and notes how marketplace commissions can be more profitable than negotiated margins for long tail products. It promotes analyzing each category individually to maximize profits.
Mirakl Assortment Strategy Webinar Slides
- 1. Assortment Expansion Strategies for Profitable eCommerceGrowth Mirakl Platform
- 2. Justin Samakow Platform AdvisoryDirector Kelly Gow Sr Product Marketing Manager
- 3. Takeaways At the endof this Masterclass, you’ll know ✓ The key decision factors behind choosing dropship or marketplace. ✓ How to go through the step by step decision process at a brand and category level.
- 4. Is there a“best model” when thinking of dropship and marketplace?
- 5. ● Goes beyondthe shopping journey ● Consistent experience across owned inventory, dropship and marketplace ● Each model has its strengths ● Advanced assortment strategies complement one another Demystifying dropship & marketplace
- 6. How do youdetermine if a product, category or brand is right for dropship or marketplace?
- 7. Finding the rightfit for unowned inventory *eConcession model, typically for luxury brands, is functionally & financially the same as marketplace, but with some UX and customer care differences **Assuming you can lock in supplier inventory in dropship model to prevent out-of-stocks; See detailed analysis for comparison Dropship • Extending assortment in core categories with key brand partners Dropship is recommended for • Core products where logistic costs & COGS are lower for dropship compared to owned inventory (e.g., bulky or heavy)?** Dropship is required if • You must own product pricing • Strong selling Marketplace products where higher gross margins can be achieved Marketplace • Brands/suppliers require an eConcession model* Marketplace is required if Marketplace is recommended for • Incorporating core categories with a long tail of suppliers at minimal cost • Testing new categories online with minimal risk & cost • Owned or dropship categories with low levels of profitability • Prioritizing rapid speed of go-live for new products
- 8. What should retailersconsider when defining their assortment strategy?
- 9. 1. Start withbrand expectations Note: Model can be different by category for a given brand/supplier Brand requires Marketplace model Marketplace Brand requires Dropship model *1P not included in decision tree Does the brand require Marketplace or Dropship for each of their categories? Dropship 1 1 2 3 4
- 10. Brands are shiftingchannel preferences… “Over the past few years, we have shifted from a legacy, wholesale distribution model to investment in a model that gives our consumers a more premium shopping experience” John Donahoe, CEO, Nike Sources: CPP Luxury, Business of Fashion, Retail Insight Network, Retail Wire 1 2 3 4
- 11. 2. Continue withyour own requirements Brand is neutral on model for each category and/or you can dictate the model to seller Note: Model can be different by category for a given brand/supplier Brand requires Marketplace model Marketplace Dropship Brand requires Dropship model *1P not included in decision tree Do you have a wholesale relationship (owned inventory) and require the same model for unowned inventory? Do you require ownership of the selling price? Yes, to either or both Does the brand require Marketplace or Dropship for each of their categories? 1 2 1 2 3 4
- 12. The right opportunityfor dropship Benefits of leveraging dropship: ● Stronger negotiating power with vendors ● Closer relationship with vendors ● Tighter control over pricing Wholesale volumes High Co-Op Spending Existing Shop in Shop 1 2 3 4 Pricing strategy can also drive the decision…
- 13. 3. Consider catalogdynamics Brand is neutral on model for each category and/or you can dictate the model to seller Note: Model can be different by category for a given brand/supplier Brand requires Marketplace model Brand requires Dropship model *1P not included in decision tree Do you have a wholesale relationship (owned inventory) and require the same model for unowned inventory? Do you require ownership of the selling price? Yes, to either or both No to both 3 Dropship Does the brand require Marketplace or Dropship for each of their categories? 1 2 1 2 3 4 Does the catalog have considerable high-volume coverage of core categories? No Marketplace
- 14. Use marketplace totest & learn Marketplace can help merchandisers enter new and adjacent categories when: For long tail products, marketplace commissions can be more profitable than negotiated margins 20% 10% 0% Operating Margin Marketplace Operating Margin Unprofitable products to offer via marketplace SKUs or categories Unfamiliar with category’s cost structure Lack extensive knowledge of market trends Lack bandwidth to continuously manage pricing and product selection Category specific attributes can differ greatly from existing categories Category Strategy Vendor Negotiation Product Setup Category Management 1 2 3 4
- 15. 4. Analyze profitability 1 2 3 4 Brandis neutral on model for each category and/or you can dictate the model to seller Note: Model can be different by category for a given brand/supplier Brand requires Marketplace model Brand requires Dropship model *1P not included in decision tree Do you have a wholesale relationship (owned inventory) and require the same model for unowned inventory? Do you require ownership of the selling price? Yes, to either or both No to both No Dropship Yes Does the brand require Marketplace or Dropship for each of their categories? DS more profitable MP more profitable Marketplace Will you be more profitable selling this brand’s category in Dropship or Marketplace? 4 3 1 2 Does the catalog have considerable high-volume coverage of core categories?
- 16. Can you helpbring this to life?
- 17. Different categories, differentways to maximize profit! Sneakers Mattresses Rugs ● High markup with strong gross margins, but requires heavy co-op marketing ● Expensive to make logistic moves (shipped from factory) ● Does not fit department store logistics (bulky & heavy) ● High velocity item, with accurate forecast & can be bought in bulk ● Need to carry sufficient stock in store ● Footwear fits store logistics ● Long tail of colors, sizes, patterns & price points ● Slow turning due to massive assortment & one-of-a-kind items ● Expensive logistic moves Owned inventory (1P)* Dropship (DS) Marketplace (3P) Generally, best in: Generally, best in: Generally, best in: *Opportunity to backup stock with DS or 3P
- 18. Profitability structures differper model P&L comparison for mattresses For a given incremental top line (GMV = $100), which model would be most profitable for your business? • Lower Gross Margin driven by higher COGS (delegation to supplier, individual vs. bulk purchase) • Leaner variable cost structure due to limited logistics costs • No cost of holding the inventory (cost of capital) + leaner team to manage Dropship vs. 1P eCommerce • Commission based model: commission = gross margin • Optimised variable cost margin (no logistics costs, low CAC, lower customer care costs) • No cost of holding the inventory (cost of capital) + much leaner team to manage Marketplace vs. 1P eCommerce
- 19. How does Miraklhelp?
- 20. Mirakl’s suite ofconnected commerce solutions
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