Cross Docking or Direct Shipping: Which One is Right for Cross Border Ecommerce?

July 18, 2018

According to a recent study conducted by Flow across 11 top global e-commerce markets, 67% of apparel shoppers have made a cross-border purchase in the prior six months. With so much e-commerce revenue now coming from outside the U.S., brands and retailers are looking for more efficient ways to handle global order fulfillment and delivery. Global e-commerce consumers have high expectations on delivery times, and it doesn't matter to them whether the retailer is local or based thousands of miles away. This combination of high demand and higher expectations means that brands must build a shipping and logistics strategy that reflects the way modern, direct-to-consumer e-commerce shops operate.

We have previously discussed how a direct-to-consumer approach enables merchants to retain greater control over the customer experience. This same principle can be applied to the shipping and logistics aspects of cross-border e-commerce. Brands want to be in the driver's seat when it comes to controlling the customer experience during a visit to an e-commerce website. But true, end-to-end control has to extend beyond the transaction to include a seamless delivery experience. Today's digital-first, direct-to-consumer brand has flipped the script on what we thought we knew about retail. Why should a modern brand that operates in an entirely new way continue to rely on outdated shipping strategies that were designed for traditional retailers?

Cross Docking: a 20th-century approach

The most popular approach to shipping for traditional retail and ecommerce businesses has historically been cross docking. First established in the 1930’s, cross-docking is a common approach to logistics in which products from a supplier are distributed to a customer or retail chain with little-to-no handling or storage time — no-touch or one-touch processing. The name “cross docking” comes from the process of receiving products through an inbound dock, and then physically transferring them across the dock to the outbound dock where the goods are then handed off to the carriers. The process has been slightly updated over the years due to advancements in logistics software and transportation vehicles themselves, but other than that, the principles are exactly the same.

In the global e-commerce context, the retailer or brand partners with an international e-commerce provider who sets up the package for international shipping. The package is shipped from the retailer or brand’s warehouse to a domestic hub or a cross-dock. The international -ecommerce provider estimates duties and tax and prepares the necessary forms for the packages to meet the destination country’s customs and duties requirements before shipping the product to international customers. The key benefit of cross-docking is that it enables existing fulfillment centers to ship globally without changing any processes.

But for most 21st-century direct-to-consumer e-commerce brands, cross-docking is an outdated mode of shipping that has some significant disadvantages. First and foremost, brands and retailers risk losing control over the delivery chain once a customer's order is sent to a cross-dock. This can negatively impact the ability to deliver seamless customer service in the event that there is a refused delivery or a return.

Cross docking can also add more time to the transit window, which translates to a longer wait time for the customer. For brands and retailers battling for market share in global markets, longer wait times for delivery isn't an option. International customers are already going to wait longer for their purchases, simply due to geographic challenges. Why add more time to the delivery window or more steps to the process? Slow shipping can make or break a brand's reputation in global markets and the length of time consumers must wait for delivery will influence their decision to buy. Our own research shows that 38% of total respondents who have never made a cross border purchase site "slow product delivery" as a top barrier to cross border shopping.

Direct or Hubless shipping: for the modern e-commerce merchant

For retailers and brands who need more control over delivery for international customers, what we at Flow call hubless shipping is a strong alternative to cross-docking because it allows merchants to retain control through the entire process. With hubless shipping, retailers and brands can fulfill orders from their warehouse directly to international customers, eliminating the need to ship to a cross-dock distribution center before moving the order to international shipping.

It's true that a hubless shipping model does may require up-front investment by retailers but is worth it in the long run. Warehouse staff will require training in the steps involved in shipping internationally, such as printing the appropriate labels the last-mile carrier will need to successfully deliver in the target country. They will need to recognize which corresponding labels and documentation are required depending on the destination. There will also need to be a software integration to unify information between the warehouse and the e-commerce website. Flow will work with you to make sure this integration process is painless and doesn't interrupt business. Furthermore, Flow uses artificial intelligence to estimate duties and tax, enabling the retailer's current warehouse to print the necessary forms and commercial invoices for international shipping, along with the shipping label.

The benefits of the direct or hubless shipping model include:

  • Reduced transit window to end consumer – faster delivery times
  • Reduced (or in some cases, eliminated) domestic line-haul costs
  • Reduced vendor data management risk
  • Reduced third-party management risk
  • A savings of $5 to $8USD per shipment when compared to cross docking
Cross-Docking and Direct Shipping
The differences between a cross-docking and direct shipping model.

Shipping and logistics gets modern: Charles & Colvard

An example of an international retailer who ditched the centralized shipping model and now reaps the benefits of hubless shipping is Charles & Colvard, a direct-to-consumer jewelry retailer. Before selecting Flow as a cross-border e-commerce provider, Charles & Colvard worked with a legacy cross-border trade solution. While that platform enabled the retailer to transact with global consumers, they soon found that the corresponding shipping model was inefficient. Charles & Colvard's products were required to pass through an intermediary shipping hub before being sent on to the end consumer. This increased overall shipping costs and created unexpected delays in delivery.

When Flow was brought in to help, the first step was to eliminate the intermediary hub and instead leverage Flow's direct shipping model. In a very short time, Charles & Colvard saw a difference. They now had the power to create a seamless experience and faster delivery for their international customers. Shipping transit time to global customers was cut by a third or more in most cases. The result of leveraging Flow's technology: during the 2018 holiday season, Charles & Colvard saw its cross-border sales increase by 250% compared to the previous year.

To succeed at cross-border e-commerce, it's important for brands to keep control over products, logistics and data as part of the international customer experience. Retailers need their systems and processes to be scalable as their business grows internationally. They also need to be open to changes in processes that will ultimately improve business outcomes and increase conversion. This can be achieved with some upfront investment and training, and by working with the right cross border e-commerce partner. With that said, for those online brands and retailers who need cross-docking for things like drop-ship, Flow offers an option that will still allow e-commerce businesses to maintain visibility and gain more control over delivery and customer service.

Hubless shipping offers a more efficient way of maintaining control while getting your product to customers faster. Flexible, simple, low-cost shipping options are in reach with hubless shipping, along with full pricing control and a more comprehensive shipping policy that your customers will appreciate.

Find out more about Flow's logistics modules by requesting a demo today.

Order fulfillment