How do brands share inventory with wholesale partners in a connected retail model?
Brands and retailers increasingly sell each other's stock: retailers list store inventory on platforms, brands drop-ship for partners. The models work only with clean data, clear margins and agreed returns.
KEY TAKEAWAYS Summary by the editors
- Connected retail between brands and wholesale partners means that stock held by one party can be sold through the other's channels, through models such as platform listings of store stock, brand drop-ship and shared stock visibility.
- Zalando's Connected Retail programme, launched in 2018, let physical retailers sell store stock on Zalando; Zalando announced in April 2026 that it would end the programme in June 2027 and move partners to its zDirect programme.
- Every inventory-sharing model depends on frequent, accurate stock feeds, shared product identifiers such as GTINs, and order, cancellation and return messages between systems.
- The commercial terms (who sets the price, who carries markdown risk, how margin is split and who pays for returns) usually take longer to agree than the technical integration.
- AI can help decide how much stock to expose to each partner and flag unreliable feeds, but it cannot fix missing identifiers or stale inventory data.
Brands share inventory with wholesale partners by connecting stock data and orders across company boundaries, so that a product held by one party can be sold through the other's channels. The main models are retailers listing store stock on a platform, brands drop-shipping orders for a partner's website or stores, and brands giving partners live visibility of available stock. Each depends on accurate stock feeds, shared product identifiers and clear commercial rules on margin and returns.
What does connected retail mean between brands and wholesale partners?
In a classic wholesale model, stock changes owner once: the retailer buys a season's order and then sells it. Connected retail loosens this. A brand may keep stock in its own warehouse but make it available to a partner's customers, or a retailer may expose its store stock to a platform's online customers. The goal is to sell more of the existing stock at full price and avoid lost sales on missing sizes, without each party holding the full assortment.
Which inventory-sharing models exist?
| Model | How it works | Who holds stock | Main integration need |
|---|---|---|---|
| Retailer store stock on a platform | A retailer lists store inventory on an online platform and ships orders from its stores | Retailer | Stock export from the retailer's ERP or POS to the platform |
| Brand drop-ship for a retailer | The retailer sells brand items online or in store; the brand ships to the end customer | Brand | Stock feed to the retailer, order and dispatch messages back |
| Shared stock visibility for re-orders | Partners see brand stock available for quick replenishment | Brand | B2B portal or EDI stock messages |
| Concession or consignment | The brand owns stock in the partner's store until sold | Brand | Sell-out and stock data from the partner's POS |
What happened to Zalando's Connected Retail programme?
Zalando's Connected Retail programme is the best-known European example of the first model. As described by Internet Retailing in 2020, participating retailers exported inventory data from their ERP systems to Zalando, and customer orders were fulfilled directly from their stores via carriers, while Zalando provided content, payment, order management and customer service.
In April 2026, FashionNetwork reported that Zalando would end Connected Retail, which it launched in 2018, in June 2027 and integrate participating retailers into its zDirect partner programme with modernised technical infrastructure. Zalando said the change streamlines operations and improves data analysis, lets partners process orders directly from their shops, and gives access to 27 European markets, and stressed that it is not turning its back on physical shops. For brands and retailers, the case shows that inventory-sharing programmes evolve with the platform's technology, and that integrations need to be planned with that in mind.
The decision to end a programme does not mean the underlying idea has failed. Zalando said partners have signed amendments and that it offers dedicated support for the switchover before the old technology is withdrawn. For participating retailers, though, a platform change means new integration work, testing and possibly new commercial terms within a fixed timeline, which is a cost to factor into any connected retail business case.
What integrations are required?
- Stock feeds at a frequency that matches sales speed, with safety buffers so that the last unit is not sold twice.
- Shared product identifiers, typically GTINs per size and colour, and consistent product data so that listings match the physical item.
- Order messages from the selling party to the stock holder, plus confirmations, cancellations and dispatch notices with tracking.
- Returns flows that state where a returned item goes and how it is credited.
- Settlement data so that each party can reconcile sales, margin and fees.
Footwear brand Cole Haan described in October 2024 a drop-ship and endless aisle set-up that captures orders from e-commerce and stores, routes them to third-party fulfilment and handles tracking and financial booking. The same building blocks apply when a brand fulfils orders for its wholesale partners.
What are the commercial questions?
The technical connection is usually the easier part. Brands and retailers need to agree who sets the selling price and whether partners may discount, how margin is split on drop-ship sales, who carries markdown risk on stock the brand holds, who pays outbound shipping and returns, and whether the brand may see customer data for orders it fulfils. Store fulfilment also has costs: Modern Retail noted in 2025 that Nordstrom Rack had discontinued ship-from-store in 2022, a reminder that store-based fulfilment does not suit every business.
Visibility of data is another negotiating point. A brand that fulfils orders for a partner learns which items sell where, and the partner may worry that this information helps the brand compete through its own channels. Agreements that define which order, sell-out and customer data each side may use, and for what purpose, build the trust these models need. Where customer personal data are shared to fulfil orders, data protection rules on purpose limitation also apply.
Where does AI help, and where are its limits?
AI and optimisation are useful for deciding how much stock to expose to each partner and channel, balancing the chance of a full-price sale against the risk of overselling. Models can also predict which partners' stock feeds are unreliable by comparing reported stock with cancellation rates, and they can forecast which drop-ship items are likely to be returned. The limits are clear: if identifiers are missing or stock feeds arrive once a day, no model can prevent cancellations.
How should brands prepare?
- Clean product data and GTINs for every size and colour.
- Measure stock accuracy in the locations you plan to expose.
- Define the commercial model per partner in writing, including returns.
- Choose integration standards your partners already use, whether EDI, APIs or a platform connector.
- Track cancellations, delivery times, returns and margin per partner from the first order.
Frequently asked questions
What is connected retail in fashion?
It describes models in which stock held by one party, a brand or a retailer, is sold through another party's channels, such as retailers listing store stock on a platform or brands drop-shipping for retailers' websites.
Is Zalando's Connected Retail programme ending?
According to an April 2026 FashionNetwork report, Zalando will end Connected Retail in June 2027 and move participating retailers to its zDirect partner programme with updated technology.
What data do brands need to drop-ship for wholesale partners?
Accurate stock per size and colour, shared product identifiers such as GTINs, order and dispatch messages, and a defined returns flow. Settlement data are needed to reconcile margin and fees.
Who carries the risk in a brand drop-ship model?
Usually the brand, since it holds the stock until sale, but margin splits, markdown rules and returns costs are negotiated per partner and should be written into the agreement.
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SOURCES
- FashionNetwork: Zalando ends its Connected Retail programme for brick-and-mortar retailers
- Internet Retailing: Zalando extends Connected Retail to Poland, Sweden and Spain
- Business Wire: Footwear brand Cole Haan embarks on a digital growth strategy with Jesta I.S.
- Modern Retail: PetSmart is now shipping 90% of its online orders from stores instead of distribution centers
