Depending on the products you sell, the size of your business, and the location of your customers, shipping directly may be a wise business decision or even a downright necessity. Find out how an efficient direct shipping system can maximize your company resources and customer satisfaction.
What is direct shipping?
Direct shipping refers to a method of fulfillment in which products are sent directly from supplier to consumer, circumventing a physical store or warehouse. Shipping directly differs from dropshipping, in which goods are sold by a third-party retailer online and shipped by the supplier.
With direct shipping, DTC brands can sell products to customers without having to secure and maintain a physical retail shop or sell wholesale to retailers. If you already have a physical presence, direct shipping allows you to maintain only a small inventory rather than a full stock of each product in all its varieties.
What is a direct shipping network?
A direct shipping network is the transportation infrastructure used within the supply chain. It includes aspects such as routing and scheduling. When you're developing your company's direct shipping network, aim to answer these questions:
- Based on my company's size and resources, is it better to keep fulfillment in-house or outsource it?
- Which shipping carrier should I use?
- Are my customers mostly local or more nationwide and international?
- Where should my warehouses be located to make shipping more efficient?
By planning your direct shipping network around your company's specific needs, you'll be able to streamline the entire delivery process. Your products will be delivered more accurately, effectively, quickly, and affordably.
What are the advantages of direct shipping?
Direct shipping is especially advantageous for leaner ecommerce companies that are just starting out or have smaller order volumes. Its five main benefits are:
- More control over inventory
- Save on logistics costs
- Ease and convenience
- Shorter transit times
- Expansion opportunities
More control over inventory
When you ship direct, you'll have more control over your inventory, branding, and orders. This can help bring you closer to your customers if you want to customize packaging and branding.
Save on logistics costs
Because you’ll be able to control how your products are handled, stored, and shipped, shipping direct can help you save money on supply chain expenses. Direct shipping also eliminates the extra expenses that come with third-party distribution centers, including warehouse and logistical costs. You can then pass these savings on to your customers.
Ease and convenience
By choosing to ship direct, your company doesn't need to worry about overseeing a supply chain with stops at warehouses or seller facilities. After you pass on the delivery information, the supplier will manage the rest.
Shorter transit times
With direct shipping, your company doesn't need a physical store or a distribution center. Without these intermediaries, your customers will receive their products much more quickly.
Expansion opportunities
Direct shipping means your business won't need to store inventory or manage shipments. Instead, you'll be using larger shippers and suppliers that are more efficient. As a result, your company will be able to reach a larger customer base and sell larger quantities of products, but you won't need to create a larger retail space or increase your company's resources to do so.
What are the risks associated with direct shipping?
Direct shipping is not without its drawbacks. Being aware of the risks—like product availability and quality management—you can decide if direct shipping is appropriate for your business and customers.
Product availability
While shipping direct gives you more control over the inventory, you'll also have more responsibility that may otherwise be handled by an intermediary, like a 3PL. This could be a problem if you're not prepared for a sudden surge in product orders. If you expect an increase in customer orders, secure enough warehouse space to store all the items you'll need to meet the anticipated demand.
No shipping guarantees
When you ship direct, there's no way to ensure the quality of the products sent to the customer from the supplier. This can put your reputation in jeopardy if there are shipping issues with a customer. Third-party logistics (3PL) provide a better way to ensure shipping through SLAs.
Requires more internal work
Generally, direct shipping requires more internal resources to manage customer service and fulfillment processes. This will lead to more fulfillment costs for payroll, shipping expenses, software, and more.
How is the product stored with direct shipping?
Typically, with direct shipping, the business owner is responsible for storing products and shipping items to customers. If your company makes large products or receives lots of orders for larger quantities, it might make sense to outsource your fulfillment.
