The Research On The Factors Of E-retailer Adopt Drop-shipping Model

With the increasing popularity of information technology and the rapid development of network economy, China's online shopping market and cybershopper number witness an explosive growth. For the advantage of convenience and low price, the various commodity sales models based on network environment attract more and more people concerned. Under Web-based environment, the suppliers hope to promote their products more effectively, expand business, understand the requirements of target customers, and realize marketing promotion. The e-retailers hope to lower the e-commerce market access threshold, save operating costs, and reduce inventory costs and tying funds. With the vigorous development of the network economy, a new channel business model under the e-commerce environment, named drop-shipping model, came into being.According to drop-shipping model, the e-retailers act as intermediaries which accept orders from customers, but do not hold inventory. Relatively, the suppliers hold inventory, bear risks and fulfill orders. With the application of drop-shipping model, the separation of information flow and logistics can be achieved in all probability. It can be used for reference to saving operation costs for suppliers and e-retailers. It brings new opportunities and injects new vitality to the bilateral cooperation between suppliers and e-retailers. Since drop-shipping model is flourishing, for the healthy development of this model in China, it is imperative to study the advantages of the model, offer deep insight into the critical factors influencing e-retailers' decision to adopt the model, and make suggestions to push the optimization of the model forward.In this paper, drop-shipping model is the basis point of study, and e-retailers are the key study objects. First of all, according to the research, it is found that e-retailers can apply drop-shipping model to avoid inventory risks, increase their own profits, and achieve overall optimization of the supply chain. Next, taking e-retailers as starting point, the paper applies innovation diffusion theory, trust theory and transaction cost theory as the theoretical basis to build DSA model, which is used to discover the critical factors influencing e-retailers'decision to apply the drop-shipping model. Then, based on the background of China, the sample data acquired through questionnaire method. By means of statistical analysis methods, the data are used to test DSA model and related research hypothesis. Overall, DSA model has been verified. Finally, according to analysis of the results of the study, some research implications are discovered. Based on the implications, the specified countermeasures and suggestions are provided to encourage e-retailers to apply drop-shipping model and to help drop-shipping model develop orderly and robustly.The paper's research contents and principal innovations are reflected in the following three aspects:First, the coordination advantage of drop-shipping model to supply chain is theoretically demonstrated. By means of clear definition for the characters, the paper discriminates between drop-shipping model and other related business operating models, including channel operating models, production operating models and inventory management models. On this basis, the paper steps further to demonstrate drop-shipping model's advantage to supply chain coordination, and the impact of drop-shipping model on earnings of suppliers and e-retailers. The research studies the simple supply chain consisting of a single supplier and a single e-retailer, and analyzes the difference in earnings of the supplier, the e-retailer and the whole supply chain under the traditional model and the drop-shipping model. The research discovers that under the drop-shipping model, although the inventory risks are transferred from the e-retailers to the suppliers, the latter can make use of the price adjustment, risk-sharing and benefit-sharing mechanisms to accomplish the overall supply chain optimization, so as to achieve a "win-win" state for the suppliers and e-retailers. Therefore, the research draws the conclusion that the adoption of drop-shipping model helps to increase profits for not only e-retailers, but also suppliers, and is of advantage in the optimization of the overall supply chains in all probability. Finally, the argument is provided that, from the perspective of channel-optimized, the drop-shipping model helps e-retailers to avoid financial risks and inventory risks, while access to channel profits, and helps to achieve overall coordination of the supply chain as well.Second, through the comprehensive application of innovation diffusion theory, trust theory and transaction cost theory, a theoretical model, called DSA model, is constructed. The DSA model discovers the critical factors influencing e-retailers' decision to adopt drop-shipping model. The basis theory of innovation diffusion emphasizes the influence of new technologies and new models on the adoption behaviors of organizations or individuals, and focuses on the positive value perception from a profit perspective. The trend theory of innovation diffusion takes into account the impelling force of competitive pressures and trend pressure to the innovation diffusion. The trust theory stresses the impact of trust on people's behavior orientation. The policy-maker's trust tendency, trust of outside systems, and confidence in partners will all affect the policy-maker's behavior model. The transaction cost theory considers the channel mode selection problem from economics point of view, and argues that provided with other identical factors, e-retailers prefer the lowest-cost channels during the transaction process. It emphasizes the negative perception brought by uncertainty and asset specificity, and highlights e-retailers'expenditure for the adoption of the chosen channel mode. Drop-shipping is a new channel operation model. For its uniqueness, the paper launches the study by changing traditional single perspective into multi-dimensional perspective. Based on innovation diffusion theory, trust theory and transaction cost theory, from the dimension of technology, environment, trust and cost, a conceptual model demonstrating the factors affecting e-retailers to adopt drop-shipping model or not is built, which systematically explains the critical factors influence on e-retailers'adoption tendency and their impact path in the critical dimensions.Third, on the condition of China background, the DSA model is verified, and the analysis of validation results for. the DSA model is provided. Based on the analysis, some practicable proposals and countermeasures are presented. The overseas development of drop-shipping model is much better than domestic in the speed and scale. Compared with developed countries, China has a large number of differences in cultural background, infrastructure, management experience and other aspects as a developing country. So, there must be some particularities in drop-shipping model's development in China. The paper establishes research in the background of developing country and digests these particularities, which grants the research unique value. In the background of the developing country China, the research explores the attitude and adoption behavior of the e-retailers to drop-shipping model in depth. Combined with China's national conditions, the critical factors affecting e-retailers to adopt drop-shipping model are identified, and census data are collected originating from the e-retailers. The data are used to verify and analyze the DSA model. According to the analysis, the paper presents specified measures targeting to improve the fast and robust development of drop-shipping model in China, and encourage e-retailers to adopt drop-shipping model. The measures are distributed mainly at four aspects, including bringing drop-shipping's own superiority, optimizing external development environment, building trust oversight mechanisms and improving competition and cooperation mechanisms. To sum up, the paper provides a theoretical and practical guidance for the robust development of drop-shipping model in China.