Virtualstock Bringing Dropshipping Tech to The NHS (Part 1) – Christmas Trees & Bear Grylls …

You don’t come across many successful software firms who funded a key early stage of their development through selling Christmas trees from the car park in front of their office. But that was perhaps the highlight – in human interest terms anyway - of the Virtualstock (VS) story, as told to us recently by Ed Bradley, one of the firm’s founders.

In part 2, we’ll come onto the current situation with the firm, which as we have reported previously is playing a key role in what could be a major step forward for the NHS in terms of how it manages procurement and supply chain issues. The history though is fascinating – and not just because of the trees!

Bradley and his co-founder Tim Ingham worked for a large IT distributor, one that acted as a middleman, buying from manufacturers and selling to retailers and service providers. When that firm went under in 2003, our heroes saw an opportunity, and approached firms offering to save them money on their purchase of IT products – on a share of savings basis. To do that, Virtualstock collected price and stock information from many different suppliers, and built what was basically a complicated spreadsheet that compared prices and identified the best deals, all subject to stock availability.

A major stationery firm was an early customer, and they were happy to save some money and pay VS their share of that. But sensibly, the customer said they wouldn’t work on that basis permanently. However if VS could give them a tool so that they could do this themselves, they would buy the tool. So Bradley and Ingham took the initial profit from their first couple of deals, and leveraged that by running the Christmas tree business from their Fulham Road office!

With the funding now available, they built the product that customers could use as a combined price comparison and stock availability tool. It’s worth noting that this was 2005 and as Bradley explains “we were running this in the Cloud – before anyone called it the Cloud”!

But as we move on to around 2008, the VS founders saw a related but slightly different opportunity. They rebuilt the platform, using Python for the programming (which proved to be a good long-term tech decision), and incorporated an order processing gateway into the product, and the ability to pull complex product data onto the platform. This really enabled a new and deeper level of connection and collaboration between suppliers and retailers.

And it fit perfectly with what was just starting to be a huge change for the retail industry. Amazon was gaining traction, and other retailers, from supermarkets to DIY stores and antique dealers, started seeing the potential for growing their web-based retail business.

Initially, most of what was sold by any given retailer was product they also sold in their stores and held in their own warehouses. But VS saw the early beginnings of “drop-shipping” around this time. Drop-shipping is the process whereby a website offers products for sale that do not physically come through that retailer or website owner’s own supply chain. So the order that is placed by the customer is sent to a third-party supplier, who fulfils the order on behalf of the retailer, usually with the whole process branded so that the end customer perceives that their transaction is with the website / retailer.

So for example, one project for VS was setting up and running a retail website for Bear Grylls (the explorer and TV presenter) which sold product all over the world – but there was never a Grylls factory, warehouse or truck. Everything was delivered via partners.

In part 2 we will get more deeply into drop-shipping, and bring you up to date with the Virtualstock story. Tune in tomorrow for that!

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