Definitions
Cross-dock
When you sell a product that you don’t have in stock, cross-docking allows you to purchase this product from the supplier upon receiving the customer’s order. Once the product is received, you ship it directly to the customer, thereby reducing the time and costs associated with traditional stock management.
Dropshipping
With dropshipping, you offer for sale products that you don’t physically have in stock. Upon receiving the customer’s order, you immediately forward this order to your supplier, who then ships the product directly to the end customer, allowing you to focus on sales and managing your online store without the logistical constraints of stock.
Advantages
Minimization of value and storage space
By adopting strategies like cross-docking and dropshipping, you reduce the need to maintain a large physical stock, which can save you money by reducing storage costs and freeing up space in your warehouses.
Offering a wide range of products on your website
Through dropshipping and cross-docking, you have the opportunity to offer your customers a broader selection of products without investing in purchasing and storing large quantities of goods. This can help attract a wider audience and cater to a variety of needs and preferences.
Disadvantages
Often extended shipping times
In the case of cross-docking and dropshipping, products often need to be shipped from the supplier directly to the customer, which can result in longer shipping times compared to products available in stock. This could potentially impact customer experience and satisfaction.
Higher cost for the e-retailer
Due to additional shipping fees associated with directly sending products from the supplier to the customer or double delivery in the case of cross-docking, as well as the management costs associated with coordinating orders and shipments, the overall cost may be higher for the e-retailer compared to traditional stock management.
Uncontrolled stock-out risk
Outsourcing part of your stock to the supplier can lead to an increased risk of stockouts if the coordination between orders and replenishments is not well managed, potentially resulting in lost sales and customer dissatisfaction.
Best Practices
Reserve dropshipping/cross-docking for ancillary products
Use these methods for products that are not essential to your core business, or for testing new products and market segments. For popular products, consider integrating them into stock for immediate availability.
Sync your supplier stocks within your WMS
To avoid stockouts and ensure an optimal customer experience, ensure that your supplier stocks are regularly updated and synchronized with your warehouse management system (WMS). This will allow you to better anticipate replenishment needs and maintain appropriate stock levels.
Tailor availability messaging for a better customer experience
Customize availability messages on your website based on product status. For example, in-stock products can be displayed with a “Ships within 24 hours” message, while cross-docked products may have a “Ships within 72 hours” availability message, offering transparency and clarity to customers.
In the case of dropshipping, provide a packing slip with your logo
To reinforce your brand and offer a consistent customer experience, ensure that dropshipped products are accompanied by a customized packing slip bearing your logo. This can help build trust and loyalty among customers towards your brand.
Provide customers with the tracking number from your supplier
To allow your customers to easily track their orders and stay informed throughout the shipping process, make sure to provide supplier tracking numbers as soon as they are available.
