How Indigo is growing their dropship program by focusing on the supplier experience
Indigo’s Director of Dropship, Conner MacLeod, outlines how focusing on the supplier onboarding experience has fundamentally transformed how Indigo can grow their business. Here’s what happened when Indigo decided to 10x their supplier onboarding process.
Note, we use the terminology of suppliers, this can be used interchangeably with the terms “brands” or “vendors”.
Indigo is Canada's largest book, gift, and specialty toy retailer with 172 retail locations. They are a publicly traded company with $900M in annual revenue.
Traditionally a book and gift retailer, Indigo identified an exciting opportunity to enhance their assortment of home, kids, baby, and wellness products, generating value for their customers by curating new, tasteful products.
Indigo’s strategic priority was to add more SKU’s online to add incremental revenue, thoughtfully expand their assortment, and offer their customers the best curated collection of products to shop.
That strategic priority led Indigo to dropshipping as their preferred tactic. Dropshipping quality brands allowed for faster experimentation within their product assortment and reduced inventory buys.
The Indigo team was already familiar with core problems that occur when trying to launch a dropship program. They previously worked with other “marketplace” and EDI software as part of launching an experimental dropship program called Thoughtfull.
These problems include table stakes requirements such as inventory syncing, price list functionality, and ensuring uniform product data is sent to their PIM systems.
Yet, the most painful of these problems was supplier churn, where suppliers found the software used in the onboarding and sales process too complex and cumbersome.
The result? Brands took 2-3 months to finish the onboarding process or disappeared altogether. This phenomenon made it impossible for Indigo to move quickly on its aggressive assortment expansion strategy. It resulted in endless time wastage and uncertainty within the dropship merchandising teams.
How could Indigo possibly hit quarterly targets if it took them 2-3 months to onboard a single supplier?
How could they possibly hit their goals if the brands they wanted to work with disappeared after the Indigo team invested hours of time into commercial discussions and onboarding?
"All we said was no to our suppliers" - Conner MacLeod
The Indigo team decided to explore how their business would transform if they created a 10x better supplier onboarding process.
Their previous experience with Thoughtfull led the Indigo team to Convictional, choosing our supplier enablement software as a key software partner to launch and grow their dropship initiative.
Since implementing Convictional into their PIM systems, Indigo has been able to onboard 50 brands in the span of 3 months live on their website. It previously took them 3 years to hit a similar volume of brands onboarded. Indigo is now seeing an 88% reduction in supplier onboarding times.
Convictional enables the Indigo team to work with all types of suppliers, both modern API-based (Shopify, WooCommerce, BigCommerce) and classic EDI based. The flexibility and ease of integration lets their merchandising and dropship teams to focus on strategic questions rather than worrying about the IT integration.
"Being able to say ‘I'm flexible’ is a game changer when working with suppliers" - Conner MacLeod
Now the Indigo team is setting ambitious goals for their dropship sales expansion within Canada and internationally with confidence they will be able to hit those targets.
“Hundreds of suppliers a year is what we're trying to add...we're starting in Canada. And we want to be able to expand that internationally... we're looking for millions in incremental revenue [from this program] over the next coming years. And the partnership with Convictional is really a big growth lever to do that. We needed the ability to get vendors onboarded into our ecosystem very quickly in order to scale the assortment and ultimately provide the customer with the right brands'' - Conner MacLeod
Long supplier onboarding times lead to higher costs and deferred revenue
An EDI-centric approach to onboarding resulted in suppliers spending 2-3 months stuck in the onboarding process needed to integrate their ecommerce systems with Indigo’s Product Information Management (PIM) system.
On the technical side, many of their target suppliers were unfamiliar with EDI, requiring them to take time to understand what it took to implement EDI into their own systems in order to start doing business.
Even if they were familiar with EDI, the stakeholder at the supplier doing the commercial discussion would need to work with their in-house IT team (if they had one), who were often busy with other projects. Even though the supplier would want to start working immediately, the IT work that needed to be done proved to be a lengthy blocker.
Being constantly told “you’re on the IT roadmap” 3 months down the line by suppliers significantly slowed down the onboarding process for Indigo and made it impossible to hit meaningful quarterly and annual sales targets.
Supplier churn was wasting time and human resources
Have you ever seen brands disappear after they agree to work with you?
The sister problem to lengthy supplier onboarding times, supplier churn is a phenomenon where after agreeing on the commercials (margins, SKU’s, shipping cost responsibility), suppliers ultimately never end up finishing the technical integration or abandon the partnership after integrating.
Indigo was finding that the majority of the brands they wanted to work with would disappear during the onboarding process or worse, they would onboard, then abandon the partnership without making a single sale.
To understand this better, it’s critical to understand the hurdles suppliers often face when asked to join a dropship program.
- Invest hundreds if not thousands of upfront dollars into integrating with an EDI provider
- Lengthy contracts with legal terms they don’t understand
- With unknown returns or sales numbers, often suppliers will get minimal sales that will barely cover the cost of setup
Blockbuster sales are not the main motivator for suppliers joining a dropship program. Their core motivation is using these opportunities to acquire new customers that they would normally be unable to reach. Asking for significant upfront investment on the supplier’s part makes the prospect of working with a retailer unpalatable.
“We [Indigo] are not Amazon, when you're Amazon you dictate the rules. So long as you're Amazon, you get to say things and the vendors will do it because you will drive a million plus in sales. Otherwise it's easy for those sellers to do things on their own; they will see very little value in joining your dropship program.” - Conner MacLeod
Overselling damages the brand
Indigo needed to avoid selling inventory that their suppliers didn’t have. Overselling would harm the Indigo brand, damage the supplier’s brand, and bring costs associated with customer support and refunds that all parties wanted to avoid.
Exploring new sources of revenue growth
The retail industry and consumer preferences move quickly. The leadership team at Indigo recognized that driving revenue means adapting to these trends.
A goal for Indigo was assortment expansion and adding more SKU’s for their customer base.
When each SKU that they added drove significant revenue, removing any blockers that were stopping them from adding more SKU’s became a priority.
Lengthy supplier onboarding times and supplier churn were obstacles preventing them from achieving their goals.
Building a competitive advantage through supplier diversification
Something that the Indigo team observed is that by working with their current EDI provider, on the same EDI networks, they were simply getting the same brands as their competitors for their site.
Indigo did not want to compete on price but instead on curation. They wanted to discover and then sell the best brands that their competitors didn’t have.
To build that competitive edge, Indigo needed to find a way to work with the ever-widening pool of modern suppliers who would not work with EDI while making sure they could still integrate with brands who were more familiar with EDI.
Integrating with existing systems in place
Indigo already had systems in place that they wanted to continue to use. These included a PIM (Riversand) and an EDI provider which was already managing the bulk of their supplier relationships.
Indigo needed a partner that would not require them to rip out existing systems.
Activate - Speedy Technical integration
Convictional integrated directly into Indigo’s PIM to ensure smooth data transfer of product info, inventory, and SKU’s from all connected suppliers through Convictional into Indigo’s systems. The full integration and testing process took 6 weeks to complete.
As part of the integration, the Convictional team worked closely with Indigo’s current EDI provider to ensure that vendors onboarded via Convictional EDI were successfully processed into their PIM system.
Convictional is processing EDI Purchase Orders (850), Advance Ship Notices (856), Invoices (810), and Inventory Updates (846) with Indigo. The platform has processed 60,000+ files in the last two months. Convictional sends Inventory Update EDI documents every hour to keep the information within Indigo up to date, and this can be increased to every 5 minutes if needed.
Convictional translates the EDI specification into a schema that is stored on Convictional. Anytime Indigo or the EDI provider make changes to their EDI spec, these changes are immediately updated as well. We have also developed tools that provide internal teams with controls such as retrying files or downloading their EDI documents.
Source - Discovering new brands
Dropship programs require a different approach and operating model than in-stock wholesale programs.
Convictional provided Indigo access to its in-house sourcing team, led by Elio Tremonti, who previously built and led a $125 million dropship program at Staples.
This sourcing team provided Indigo strategic advice surrounding best practices in discovering & vetting dropship suppliers. They additionally provided strategic advice on speeding up the onboarding process including recommendations around team structure and legal agreement length.
Additionally, Convictional gathered category and shipping requirements from Indigo which were used to discover and introduce brands who were excited to work with Indigo.
Onboard - Obsess over the supplier experience
“What does the vendor see?” was the question that drove the Indigo team towards Convictional. They realized they needed to optimize the supplier experience
““How quickly can they connect their stores? How seamless is it to do? What are the things that we expect them to do when they receive an order? All of those problems are where I need help. I don't need help with analytics [already have that functionality in my system]” - Conner MacLeod
Convictional made it possible for Indigo to offer the following experience to its suppliers:
- Orders get sent directly to their ecommerce system with packing slips and fulfillment info, with a tag indicating its from Indigo. No downloading orders from a portal and uploading to their ecomm system needed.
- Orders with products from different suppliers are automatically routed to the correct one
- Products from the supplier are automatically loaded and can be toggled on and off for sync, allowing suppliers to choose what products are listed on Indigo.
- Inventory numbers are synced between Indigo and the supplier for the desired SKU’s, no overselling.
- No technical teams are needed to start and complete the integration process.
- Prices and negotiated margins can be set by the supplier in bulk or on a per product basis, with currency conversions automatically calculated.
Onboard - 24hr Resolution Support
During the onboarding process, it’s inevitable that brands will run into common issues and questions around connecting their platform, syncing, and setting their prices.
Convictional’s support team is available for the Indigo team with a commitment to responding to initial support requests within 6 hours and closing out escalated support requests within 24 hours.
“Sometimes it's, ‘Hey, I need help’. And sometimes it’s just ‘hey, I just need you to know what's going on so that we can build out a really strong plan’. I do find that the support tickets are resolved. The team is responsive. The engineering team is really connected with new account teams. So I feel like between the two of those groups, they're able to answer things really quickly.
And when they're not able to [resolve quickly], they’re upfront, letting me know that ‘this is going to take a bit more time. I need to investigate this’ ” - Conner MacLeod
Onboard - EDI and API integration paths for suppliers
Convictional allows Indigo to offer a menu of connection options for suppliers. They can choose to connect to Indigo’s systems via an eCommerce platform integration App (Shopify, WooCommerce, Big Commerce), CSV, SFTP, and EDI. This removes friction from the onboarding process, allowing non-technical decision makers to start the onboarding process.
This allows the merchandising team to maintain momentum from commercial discussions, reduce supplier churn, and drastically shorten the onboarding process.
Flexibility to work with any supplier they want
Indigo can now confidently initiate discussions with potential suppliers knowing that they will always be able to integrate with their systems and get them onto Indigo’s site.
This stability lets them spend more time strategizing on assortment and provides their merchandising teams confidence to hit their goals.
When less time is spent worrying about onboarding, it leaves more time for discovering and selling great products. Isn’t that what retail is all about?
Decreased Supplier onboarding time and churn
10 days is the record time for a complete onboarding (from agreement to first sale) for a brand at Indigo, a massive improvement from 3 months, or an 88% reduction in onboarding time.
Having an additional team to support the success of the dropship program allowed Indigo to quickly discover 140 brands across the wellness, kids & baby, and gift verticals within the first week of sourcing.
Brands discovered and onboarded included Turquoise Palace, Beekeeper’s Naturals, and Schaf Skincare.
“Aligned with our strategic priorities around assortment expansion, Convictional’s technology unlocks an opportunity to welcome hundreds of new brands and thousands of new items to our digital platforms” - Andrea Limbardi, Chief Digital Officer of Indigo.
Suppliers love working with Indigo & Convictional
“I can tell you that we are with a few other large retailers and the backend platform that the majority of them use is a very archaic system. We have to jump through hoops to get anything onboarded. The support centers are all overseas and slow to respond.
The whole point with dropship is that we can quickly update inventory and remove things that we don’t have in stock only to have the ability to turn it on again.
[Other platforms have]s not been a great experience, and I’m talking across multiple large retailers.
So when Convictional approached us, we were really curious to see how different this product was from what is on the market. To be honest, we were very skeptical.
After setting it up we asked “Is this it?”
For us… that was like “oh my god, this is a game-changer”. As we got to know the system better it was intuitive, there was a low learning curve. I don’t have an easier system that I work with currently.” - Tanya Sharma, co-owner of Turquoise Palace
“It was quite seamless, we integrated in a matter of days. Convictional supported the opposite of the lengthy and confusing process you would expect to encounter at a retailer of this size. We were supported by how-to articles and content to simplify the setup which was fantastic.” - Dana Cantarutti, CEO Spinco
Scale - Increasing ambitions and confidence
With data and technical barriers removed, brand partnerships can focus on bringing the strongest assortment to Indigo.ca
After onboarding brands at a glacial pace for years, Conner and the entire Indigo team are invigorated.
“Hundreds of sellers a year is what we're trying to add...we're starting in Canada. And we want to be able to expand that internationally... we're looking for millions in incremental revenue [from this program] over the next coming years. And the partnership with Convictional is really a big growth lever to do that. - Conner MacLeod
Convictional is a supplier enablement platform that allows all types of retailers to onboard, manage, and work with their suppliers in minutes instead of months.
We find that when retailers want to work with new brands on their site, the process of integrating all relevant information can take 4-6 months on average. We help retailers like Staples, Harry Rosen, Indigo, and The Fascination discover and onboard brands they want to work with, in minutes instead of months.
Supplier enablement is a practice that can be utilized in all retail business models, including dropship, marketplace, and wholesale.
If that sounds exciting to you, we would love to chat.