Delivery and ecommerce have been evolving side by side for many decades. The pandemic sped everything up and large ecommerce companies that could previously afford to do things the old way are quickly finding that they need to adapt or get eaten by the competition.
Shipping can get very expensive, especially during the peak season. And ecommerce brands are pressured to offer fast delivery times and costs low as most consumers expect their orders within 2 days. Large delivery carriers are hiking up their prices and running out of capacity many months before the peak season even starts so ecommerce companies are left without the proper capacity and have to choose more expensive delivery options last minute.
What can brands do to cut costs, improve delivery times, and save on greenhouse gas emissions? The answer lies in point-to-point shipping, a shipping model which lets ecommerce brands reimagine delivery and solves all three of these shipping challenges.
Retailers Going Beyond the Hub-and-Spoke Model
The hub-and-spoke model is used for 99% of all deliveries worldwide. It was invented in 1955 by Delta Airlines and has been popularized by FedEx in the 1970s. This shipping model involves shipping all products from the company’s warehouse to a central hub. And then each package is shipped out to the consumer from the hub.
This is a great model for airlines as well as large retailers because it helps centralize the control of the operation and optimize long-distance deliveries of over 12 miles. This all changed with the rise of omnichannel retail and direct-to-consumer ecommerce.
High-volume ecommerce brands don’t have centralized retail locations so every delivery goes out to a different customer and a different address. And the last-mile delivery becomes the most expensive part of the fulfillment process. That’s why many ecommerce companies have been switching to the point-to-point shipping model.
What is Point-to-Point Shipping?
Point-to-point shipping is where a package is shipped directly to the consumer, without going to a central hub. This model often requires smaller localized shippers for the last-mile delivery, bringing the product directly to the customer’s doorstep without having to first ship it to a central hub or warehouse.
It’s the most effective shipping model for optimizing the last-mile delivery and it helps ecommerce companies meet next-day and 2-day delivery standards that so many customers expect.
The Benefits of Point-to-Point Shipping
There are several benefits to shipping your products directly to the customer. Here are the top three.
Amazon set the bar really high when they launched free two-day shipping for all Amazon Prime members. In order for ecommerce companies to compete and garner some of the holiday sales, they need to provide two-day shipping. Point-to-point shipping provides that increased flexibility to be able to deliver parcels at a much smaller delivery window.
The most expensive part of the fulfillment process is the last-mile delivery. Shipping a large container of products across the world is cheaper than having to ship each one of them out to the customer from a central warehouse. That’s where point-to-point shipping offers a unique advantage.
Unlike the hub-and-spoke model that is dominated by large shipping carrier companies like FedEx, the point-to-point shipping market is highly fragmented with thousands of smaller providers. These smaller providers have much lower costs and are able to pass on those savings to ecommerce companies.
We can see this with smaller airlines offering really affordable tickets and with food delivery companies like Grubhub being able to deliver grocery items within an 8-mile radius.
Reduced carbon emissions
Point-to-point shipping requires fewer steps as it doesn’t require a stopover at a central hub. That means less fuel because all the flights are nonstop, and all the means of transportation after that are smaller as they are going to the final destination.
The model often utilizes unused delivery assets that would normally be forfeited by the larger delivery companies because of the sheer size of their shipments. Instead, point-to-point shipping involves smaller quantities of product and brings it directly to the consumer in the most economical and efficient way, saving both costs and greenhouse gas emissions.
So it’s a better system for your wallet, as well as for the environment.
Large Retailers Are Starting to Use Point-to-Point Shipping
The trend we are seeing is that large retailers are switching to point-to-point shipping. The shipping app Postmates launched a partnership with Everlane, Threadflip, and Betabrand to cut delivery times. The giant retailer Banana Republic partnered with local delivery companies in 8 cities to offer same-day delivery to its customers.
Use Point-to-Point Shipping with X Delivery™
X Delivery is a shipping and delivery platform that is built for D2C ecommerce brands that want to use point-to-point shipping. We have a shipping API that can help your team scale the operation, integrate all your suppliers and shipping technology into one system, and streamline the entire process.
What’s our secret sauce? It boils down to three things.
- Our parcel shipping software leverages multiple unused warehouses, planes, trucks, sort-centers, and final-mile carriers to create the best delivery solution. Additionally, we only fly direct, reducing middle mile air emissions by up to 70% (Texas A&M University).
- We lock in your delivery costs with zoneless pricing and no hidden fees so you can enjoy flat-rate shipping even during the holiday season. Everything is simple and you don’t have to rack your brain trying to optimize shipments from your various hubs to the right zones closest to the customer.
- Our API allows you to plug and play all of your various delivery assets and tools and integrate them into one easy network to manage. This gives you the peace of mind to focus on increasing ecommerce sales while we focus on nailing your delivery.
What are you waiting for? Make 2022 your most successful year yet. Sign up to start shipping with X Delivery.