Factory Direct Fulfillment

What Is Factory-Direct Fulfillment?

Factory-direct fulfillment is a logistics model in which products ship directly from the manufacturing facility to the end customer, bypassing intermediate warehouses, distributors, or domestic inventory staging.

Instead of importing goods into a domestic warehouse first, orders are fulfilled at the point of manufacture and transported directly to the buyer.

How Factory-Direct Fulfillment Works

In a traditional model, goods typically move: Factory → Origin Port → Destination Port → Domestic Warehouse → Customer

In a factory-direct model, the supply chain is streamlined: Factory → End Customer

This approach often relies on:

International freight (air or ocean)
Cross-border customs clearance
Delivered Duty Paid (DDP) arrangements
Final-mile coordination in the destination country

Why Companies Use Factory-Direct Fulfillment

Businesses adopt factory-direct fulfillment to:

Reduce double handling of inventory
Lower warehousing costs
Shorten delivery timelines
Avoid importing goods into an intermediate country
Reduce potential tariff or duty exposure in multi-leg supply chains

For example, a U.S.-based ecommerce brand manufacturing in Asia may ship directly to a European or Australian customer instead of routing inventory through the United States first.

When Is Factory-Direct Fulfillment Most Effective?

This model is most commonly used when:

Products are oversized or high-value
Inventory is produced in batches
Demand is predictable or made-to-order
International expansion is being tested without establishing local warehouses
Big and bulky ecommerce products require freight rather than parcel

It is particularly common in cross-border ecommerce freight operations.

Common Questions About Factory-Direct Fulfillment

Is factory-direct fulfillment the same as drop shipping?

Not exactly. While both bypass traditional inventory storage, factory-direct fulfillment often involves coordinated freight movements and formal import clearance rather than simple parcel shipments.

Does this model eliminate customs duties?

No. Duties still apply in the destination country. However, it may prevent duties from being paid in multiple countries if inventory would otherwise move through more than one import cycle.

Is factory-direct fulfillment slower?

It depends on mode of transport. Air freight can be fast but expensive, while ocean freight may require longer lead times.

Does this work for domestic shipments?

Yes, particularly for large custom-built items or project cargo that ships directly from the production site to a job location.

Operational Considerations

Before implementing factory-direct fulfillment, companies should evaluate:

Customs compliance and importer-of-record requirements
Freight mode selection (air vs ocean)
Delivery service level (curbside, inside, white glove)
Transit time expectations
Returns and reverse logistics processes

Because inventory is not staged locally, supply chain visibility and coordination become especially important.