As a small business owner, you strive to cultivate a personal relationship with every one of your customers. Aside from offering great products, you want to get orders shipped to the consumer swiftly. For Marcus Milione, the founder of fashion retailer Minted New York, that required establishing an efficient direct shipping system to sell products online and ship them the same day.
Shipping directly, or mailing products straight to customers without involving a third party, can be an effective strategy. For Marcus, this approach was vital to ensuring customer satisfaction. “The consumer, when they purchase a product on my website, regardless of how small I am, they think a product should be delivered generally in two days,” he says on the Shopify Masters podcast. He attributes some of his early success to ensuring products were shipped directly, freeing all parties from the web of third-party logistics.
If your customer base would benefit from a speedy, personal approach to order fulfillment, it may make sense to set up a direct shipping service.
What is direct shipping?
Direct shipping is an in-house order fulfillment method where a seller bypasses intermediary warehouses or stores when sending a product to the customer. The seller stores and manages inventory on their own. Once a product is sold, the seller picks, packs, and ships the product directly to the customer. They control the entire fulfillment process, including packaging, shipping options, and customer service related to shipping.
Shipping directly differs from other retail arrangements where a third-party seller, such as Amazon or Target, stocks a brand’s item in a warehouse and then mails it to a customer upon receiving their order. Selling through a third-party retailer is called indirect shipping. A direct shipment removes this intermediary.
Dropshipping vs. direct shipping: What’s the difference?
Although both direct shipping and dropshipping involve selling products online, the key difference is how sellers handle fulfillment:
Dropshipping
In dropshipping, the seller lists products on their online store, but they don’t hold any inventory themselves. When a customer places an order, the seller forwards the order details and shipping information to a third-party supplier (often a wholesaler who stores products in third-party distribution centers). The supplier then ships the product to the customer, making dropshipping a system of indirect shipments.
Direct shipping
When you ship directly, you eliminate a third party from the order fulfillment and shipping process. It gives you more control over the transaction, and you save money that you’d otherwise pay to your dropshipping partner (in the form of a commission). On the other hand, shipping directly requires you to keep more inventory on hand, including packing supplies.
Benefits of direct shipping
Direct shipping may appeal to businesses looking to take control of their fulfillment operations and control logistics costs. Here are five advantages of direct shipping:
Control
With direct shipping, you maintain control over the entire fulfillment process. This includes everything from storing inventory in your own seller facilities to selecting packaging materials and shipping carriers. This control lets you verify product quality, personalize packaging for your brand, and expedite deliveries by using a single carrier you trust.
Potentially lower costs
Although direct shipping requires an upfront investment in inventory and storage space, it can also lead to lower costs by eliminating the storage and handling fees a fulfillment center charges.
Faster delivery times
Because there’s no additional step of forwarding order details to a supplier, direct shipping typically leads to faster delivery times. This is especially true for smaller order volumes, where third-party suppliers might wait to accumulate several orders before shipping them out. By handling fulfillment directly, you ship the goods promptly after receiving the order.
Enhanced customer experience
Since you have more control over the entire fulfillment process, you can provide a more efficient and positive customer experience. When you direct ship, you can address any questions or concerns regarding delivery information and offer solutions to any shipping problems. This high-touch approach can increase customer satisfaction and loyalty, which is one of the main benefits of shipping goods directly.
Risks of direct shipping
- Increased upfront costs
- Inventory management challenges
- Time investment
- Slower fulfillment for large orders
- Logistics complexities
While direct shipping can offer advantages, it’s only a wise business decision if you have the company resources needed to get your operation off the ground. Before you start a direct shipping program, weigh the potential risks, including:
Increased upfront costs
Direct shipping requires a significant upfront investment in inventory. You’ll need to purchase products in advance and store them in your own warehouse or facility. The price can be daunting for new businesses with limited capital.
Inventory management challenges
Direct shipping relies on managing inventory levels effectively. You need to balance having enough stock to meet customer demand while avoiding overstocking and incurring storage costs. Direct shipping can also limit the variety of products you offer. Since you’re responsible for your own inventory management, you may be hesitant to stock a wide range of products.
Time investment
Running your own shipping operation is time-consuming. You have to collect delivery information, handle order fulfillment, manage customer relations, and drive packages to the post office. This comes on top of your other duties as a retailer and manufacturer, such as designing products and developing your supply chain. You may not have the time or resources to do it all yourself.
Slower fulfillment for large orders
Although direct shipping can be efficient for smaller orders, it may not be ideal for large or bulk orders. Manually picking, packing, and shipping larger quantities is labor-intensive, leading to slower fulfillment times. For customers eager to receive their items, it may be slower than a dropshipping model where a supplier might have a dedicated fulfillment center and perhaps shorter transit times.
Logistics complexities
Direct shipping adds a layer of complexity to your business operations. You’ll need to establish relationships with carriers, manage shipping costs, and potentially handle any damaged goods or returns. This can require additional resources and expertise in logistics management.
Direct shipping FAQ
What is the meaning of direct shipping?
Direct shipping is when a seller stores, packs, and ships products directly to customers, bypassing intermediaries like warehouses or stores.
How do you do direct shipping?
In direct shipping, you store inventory yourself, pack and ship orders directly to customers, and manage the fulfillment process.
What is an example of direct shipping?
An example of direct shipping is when an online clothing store keeps its own stock and ships orders of t-shirts directly to its customers.
