Splitting your inventory across multiple fulfillment center locations, known as distributed inventory, can offer many advantages to an ecommerce seller.…
There are many questions you should ask when evaluating potential third-party logistics (3PL) providers. Aside from basic information such as pricing, another very important consideration is the location of their fulfillment centers.
Where a fulfillment centers are located can play a significant role in whether a 3PL is a good fit to help your company’s success. This article will explore how geography can impact order fulfillment, as well as provide some tips to help you make the best decision when choosing a 3PL.
Why does your 3PL’s fulfillment center location matter?
One of the biggest factors in choosing a 3PL is finding out the location of their fulfillment centers and if they are close to the majority of your customers.
Ideally the less distance your product travels, the quicker it gets delivered to your customer and the less money you’ll pay for shipping.
Today’s customers expect convenience and speed when making online purchases. Having your product stored, ready to be picked and shipped, close to the majority of your customers (or near major metro areas that can reach large volumes of customers quickly), will help ensure shoppers get their orders in the shortest amount of time possible.
Do you need to be in the same city as your 3PL’s fulfillment centers?
Being in close proximity to your 3PL’s fulfillment centers is not necessary. To put it plainly, if you’re a Bay Area-based merchant, your fulfillment center does not need to be located in the Bay Area. There is nothing wrong with being close to your 3PL’s fulfillment centers; it can reduce the time for your products to be shipped and then stored before they are sent out to customers.
Another consideration is distance from your 3PL fulfillment centers from your product manufacturer. Though it may lower your shipping costs if your manufacturer is close to your 3PL’s warehouse, this isn’t necessarily they most important factor to consider when making your decision.
If your customer base is primarily in the US but your products are manufactured abroad, considering which port city your products will import through might be an important factor.
When should you consider using a 3PL with multiple fulfillment centers?
When your business is just getting off the ground, working with a single warehouse may be all you need to be able to effectively fulfill your orders. However as your sales grow, it might be best to send inventory to more fulfillment centers. This is known as distributed inventory, and has several benefits, especially as many online shoppers expect two-day delivery.
Distributing inventory across fulfillment center locations doesn’t mean you’ll need to work with multiple 3PLs. Choosing a single 3PL with many locations will give you the distribution support you need, along with integrated systems, tech support, and seamless communication. This will ensure greater accuracy, transparency, and consistency in service.
The key to understanding when and where to send inventory is an ongoing process. You need to continuously analyze data to gain insights into the sales of your products and learn from that. This means monitoring any geographic shifts and growth that occur that might indicate the need to shift products from one fulfillment center to another.
By looking at this data it can help to guide your decisions and allow you to make the best choices for your company and your customers.
If your customers are like most consumers, they want a fast turnaround after they check out online. Fulfillment center location plays a crucial role in meeting these expectations. The closer your product is to your end customer, the less distance it will travel, which saves you and your customers money on shipping costs.
There are many benefits to working with a 3PL, if you are seeking logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.