The world of retail has been undergoing a major evolution in recent years, as companies seek to streamline their logistics and expand their product offerings while keeping costs down. One of the ways that they’re able to do this is by turning to new business models like drop-ship and marketplace, which allow them to scale back on the inventory they purchase and warehouse, but still offer more curated products to their customers.

With these unowned inventory models, third-party brands take ownership of manufacturing, storing, and shipping most of the retailer’s inventory, freeing them up to focus on other aspects of their business like sales, marketing and customer experience. This approach is more efficient and cost-effective, allowing retailers to expand their product offerings quickly and respond to specific market signals in an agile and flexible way.

But it’s not just about cost savings. The extensive commerce network that powers drop-ship and marketplace models generates massive amounts of data that can be used for predictive consumer demand modeling. This enables retailers to forecast demand spikes and adapt their offerings to changing patterns of consumer behavior more quickly than ever before, based on data rather than intuition.

Additionally, the adoption of hybrid retail models combining owned and unowned inventory, has allowed retailers to complement their existing product lines with agile, as-needed selection. By doing this, they are better able to serve their customers and meet their changing needs, which is crucial in today’s competitive market.

Furthermore, the data-driven insights that come with this new approach are making retailers more agile and flexible. They are able to make real-time decisions based on rapidly shifting market signals, empowering them to proactively solve supply chain problems in innovative ways. For example, when new customer demand appears, a retailer’s partner network can instantly start shipping just-in-time inventory while the retailer works on the wholesale buy.

This transformative power of an extensive commerce network is driving profitable growth for retailers who have embraced these inventory strategies. Leading ecommerce solutions provider, CommerceHub, has seen brands and retailers across its network who have hybridized their retail models increase SKUs approximately 70% year over year, totaling an impressive 126 million SKUs listed across 158 different marketplaces globally.

And it’s not just about the numbers. Retailers who have adopted predictive, data-driven hybrid retail models are better able to meet the needs of their customers in new and exciting ways. By un-siloing their data flows and collaborating with more brand partners, they are tapping into the transformative power of an extensive commerce network, driving real-time data-driven decisions that fulfill customer demand through adaptive combinations of owned and unowned inventory.

This specificity enables retailers to sell more of the exact products each customer wants, without incurring the costs and headaches of managing unneeded inventory. They can feature products from manufacturers with suddenly trendy products or those with low carbon footprints. They can also offer their customers products from brands that publicly support social-justice causes or from minority-owned businesses in their local neighborhood, if that is their preference.

The world of retail is changing, and the companies that are embracing new inventory models and data-driven insights are the ones that are thriving. By adopting hybrid retail approaches and working with an extensive commerce network, retailers can offer a wider range of products more efficiently and meet the changing needs of their customers in innovative and exciting ways.

Chris Koeppel is the Vice President of Industry Strategy at CommerceHub. He has over 16 years of ecommerce experience, focused on designing and scaling future inventory models and partnerships enabling retailers to leverage their platform beyond traditional wholesale.