Dropshipping and cross-docking solutions

Freedom of creating different supply chains is crucial for efficient scaling of online store sales. Sometimes we need to test new assortment by extending our offer or handle growing sales of existing products without spending money on bigger warehouses. This, and more, can be achieved with dropshipping and cross-docking, yet it is important to know the differences between the two, and how they are supported by IdoSell Shop.

Dropshipping and cross-docking are two approaches to supply chain management where an online stores sells products offered by external suppliers. Products are sent from a B2B store to a B2C store which it cooperates with. To manage these processes efficiently, we recommend using our warehouse management solutions. In a mixed model, where a store already owns warehousing space, certain part of products can be located in the warehouse and sold traditionally, whereas other products can be sold in the dropshipping / cross-docking model.

Dropshipping and cross-docking are an efficient way for new and existing online stores to expands the list of products on offer. When offering a varied assortment of products it is important to keep in mind your customer preferences. To make shopping easier for customers consider using the multishop functionality which lets you manage multiple shops in a single administration panel.

As a wholesale store, or a product manufacturer that also sells directly to wholesalers, you can decide to use dropshipping or cross-docking to facilitate warehouse and sales management. You can easily manage a network of your distributors who take care of special offers and direct sales. You receive current information about who needs what – it allows for a bigger product turnover.

Cross-docking

Cross-docking constitutes gaining popularity as a sales model as it enables faster and cheaper shipping processes. Products ordered by end customers are sent from a supplier to the store that made the sale. The store needs only minimal warehousing space, which can be used for dividing supplied products into customer orders. While completing orders, the store can also also attach additional marketing materials such as leaflets, name cards or discount cards. Packed and completed orders are sent to end customers. Picking up parcels from many suppliers and delivering them to a single customer constitutes the idea of cross-docking.

A point of sale terminal can also be a recipient. If you own bricks-and-mortar stores, products order from external wholesalers can be reloaded to a car delivering products directly to your local stores. At the moment of reloading, you can include other necessary items (e.g. sales documents, products from different suppliers), which are to be delivered together to a local store. Thanks to that you can shorten the required delivery time and at the same time save money.

Cross-docking can undeniably be a big challenge due to the need for handling a large number of both internal and external orders. In order to efficiently manage external stock and reduce the number of order handling errors, consider utilising process automation. IdoSell Shop lets you streamline order handling) by automating processes such as ((/wms/automation or sales document printing.

Advantages for online stores:

you do not have to own large warehousing space, only minimal space that enables repacking deliveries efficiently is sufficient, which lets you minimize costs related to owning warehousing space.
in case of brick and mortar sales you can send products from different suppliers directly to the point of sale. Thus you can facilitate the process of distribution and save time.
you shorten the shipping process between a supplier and a customer. Products that reach you are shipped to customers after repacking.

Advantages for online wholesalers and product manufacturers:

you can concentrate on logistics. You can take care of warehousing and shipping products. A network of your distributors is responsible for sales and marketing.
you can use STANDARD B2B templates,
a store can upload an order to a wholesale store online. The order appears automatically on the list of orders to be handled. Warehousing and supply management is much easier if you get information about the needs almost instantly – this in turn, allows for bigger product turnover.

Target

Cross-docking is an effective and scalable solution perfect for seasonal products, e.g. shoes, clothing, car tires. It is also perfect for products with a short best-before date, such as food or flowers, where you need specialistic and expensive warehousing methods.

Things worth remembering

If a customer orders products from a few suppliers, you need to remember about supply synchronization in order to complete customer orders efficiently. Pay special attention to quantities of products ordered from suppliers to avoid a situation where you need to store not needed products yourself.

If you receive multiple deliveries, they need to be consolidated and prepared for shipping quickly. Otherwise, it may lead to organizational chaos. Many orders may lead to potential errors. Consider using the returns module which enables fast and efficient returns management. Cash backs are recommended for settlements with external suppliers.

A perfect solution for efficient warehousing is using a warehouse management system. It is worth paying attention to continuous validation of stock levels with external suppliers, to avoid a situation where unavailable products are sold to customers. IdoSell Shop offers a dedicated solution for external stock level availability verification during order placement.

Dropshipping

Dropshipping is a sales model that lets you conduct online sales without the need to own warehousing space. Products ordered in your store are supplied by external wholesalers, who process and send orders directly to your customers. You charge the customer, the external supplier charges you and the difference between the two transactions is your profit. You are responsible for attracting customers, international sales and marketing. External suppliers manage warehousing, logistics and ship orders to end customers.

Advantages for online shop owners:

you do not have keep products in stock yourself
all you need to do to conduct your business is laptop and access to the internet
shipping is outsourced to external suppliers, while you can focus on increasing sales
ordering handling is minimal on your part. A customer places an order and pays for it. The order is transferred to an external suppliers which ships the required products to the end customer
Your profit is the difference between the price of products at the supplier and the price you offer in your online store

Advantages for online wholesalers and product manufacturers:

you can concentrate on logistics, since you take care of warehousing and shipping. The network of your distributors is responsible for sales and marketing
once created, the distributor network generates long term profits,
you can use a STANDARD B2B template in your online store,
distributors upload orders to your system electronically. Orders appear on the list of orders to be handled. You can manage supplies and warehousing easily, if current information about who needs what is transferred – this in turn enables bigger product turnover.

Target

Dropshipping is an effective and scalable solution for new businesses which would like to quickly verify which assortment will be the most popular among target customer groups, while avoiding the need for initial investments into stock and warehousing space.

Dropshipping is also recommended for already existing stores that wish to expand their assortment.When offering a varied assortment of products it is important to keep in mind your customer preferences. To make shopping easier for customers consider using the multishop functionality which lets you manage multiple shops in a single administration panel.

Dropshipping is very useful in case of large products such as furniture, household articles or products of a bigger value. Dropshipping as a supply chain management model is be often seen in such businesses that offer clothing, toys, electronics, sports equipment, etc.

Things worth remembering

When you decide on dropshipping, you need to be careful when choosing your suppliers, as they are responsible for product delivery and, ultimately, your brand image depends on their performance. It is worth to remember about setting terms and conditions with your suppliers concerning the use of advertising materials for your shipments. Some suppliers enable labelling shipments with your images and can add your leaflets, name cards, or discount codes.

If you can cooperate with a supplier, it often means that other shops (your competitors) can too, which can lead to price wars. This lets you influence the market and product quality, which is why it is often recommended to make use of dropshipping, even if it is only partial to your overall business.

Summary

More and more wholesale stores with different business types offer varied assortment. Wholesale and retail stores, thanks to ecommerce, do not have any territorial limitations. Big wholesalers often offer competetive shipping terms, thanks to economies of scale, which in turn allows online distributors to make their offers more attractive. Distributors have unlimited access to products, increase their competitive advantage and save a lot of time. Dropshipping and cross-docking sales can make running an online ecommerce business easier and make it more flexible.

Distributors can cooperate with different suppliers, without the need for large upfront costs. Suppliers in turn increase product sales thanks to an advanced network of distributors. As a professional solution for retail and online wholesale stores, IdoSell Shop supports dropshipping and cross-docking sales models by offering process automation solutions.