Why Drop Shipping Is the Key to Generation Z

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Why Drop Shipping Is the Key to Generation Z

By Jeremy Hanks, CEO, Dsco - 04/08/2017
Brands and retailers have been hyper focused on Millennials for years now. But while they’ve been busy trying to figure out what Millennials want, Generation Z, a maturing and ever more digitized and global generation, is emerging with its formidable buying power.

Just as retailers were finally starting to figure out how to cater to Millennials, Gen Z (also known as "Millennials on steroids") is leaving analysts and retailers stumped over how to redefine 21st-century retail to meet their needs. According to the National Retail Federation, "the global Gen Z population is set to reach 2.6 billion by 2020, [and] retailers need to create more interactive engagement around their brands to serve the ‘always on’, mobile focused, high-spending demographic."

Consequently, retailers are focusing more on creating "experiences" that will bring these smartphone savvy customers into their brick-and-mortar stores. Macy’s is increasing its number of in-store boutiques for various brands such Apple, Best Buy, and even Etsy shops. What’s more, Nordstrom has begun introducing smart fitting rooms equipped with interactive mirrors so consumers can read product reviews or immediately find accessories to complete their look.

While establishing a unique in-store experience is important, it’s vital for retailers to understand Gen Z’s online shopping habits in order to harness this demographic’s potential buying power.

Gen Z has been raised on social media, which means this population is highly influenced by new trends, reviews and peer recommendations. A recent Accenture report reveals that not only is this generation more inclined to make impulse purchases, but 40 percent of them elicit the opinion of family and friends when shopping. They are also almost twice as likely than Millennials to turn to YouTube before a purchase, and 77 percent of them browse social media to look for shopping ideas.

As a result Gen Z shoppers tend to make impulse purchases based on new trends and products, making it very difficult for retailers to keep up with their quickly changing spending habits.

As more and more brick-and-mortar retailers expand their businesses online, it’s important for them to remember that a few things are required in order to be able to actively respond to fast-changing Gen Z consumer trends:
  • Access to a wide variety of products
  • Intelligence about new impulse product demand
  • The ability to quickly onboard and offer trending products
In short, if you’re a retailer looking to expand into e-commerce, you need drop shipping.

For those unfamiliar with the term "drop shipping," it’s the "delivery of merchandise from a manufacturer or original supplier direct to a buyer, without passing through the warehouse of a distributor or retailer (who generated and processed the sale). It is the most common form of fulfilling orders taken by most network marketing firms and internet-based retailers."

Drop shipping is built for Gen Z’s buying habits. While gathering the intelligence around demand will take smart coordination between your marketing and merchandising teams, drop shipping enables quick access to new products, and the ability to quickly onboard and offer those products. The key here is time. Because retailers don’t need to physically buy, ship and stock inventory items, they can quickly add them to online catalogues with little cost and no inventory risk. Once a retailer has an item available online, its supply partners take care of all of the packing and shipping, meaning everything can be ready to go at the click of a button.

Drop shipping therefore allows retailers to stay nimble and keep their offerings responsive to the impulsive purchasing trends of Generation Z. It also allows retailers to offer a wider selection of colors and sizes that translates into more potential sales.

It’s essential to appeal to this demographic now, as Gen Z’s purchasing power will rise exponentially in the near future. If you’re a retailer, remember: access to a wide variety of products, the ability to quickly onboard and offer trending products, and understanding new impulse product demand will have a huge impact in establishing brand loyalty and maintaining long-term customer retention.

If this is important to you, drop shipping may truly be the key to Generation Z.


Jeremy Hanks is CEO of Dsco, a provider of drop shipping B2B integration.