Outsourcing is an effective way to manage ecommerce fulfillment and logistics, but it is important to learn if your third-party logistics provider (3PL) has more than one facility and where they are located. This is because spreading inventory across multiple fulfillment centers and geographic locations means you can be as competitive as companies with their own locations across the US, without the hassle of building up your own infrastructure.
Using distributed inventory means storing inventory in multiple fulfillment locations at one time so that each order will be shipped from the location closest to that customer. Learn why many ecommerce companies store their inventory in more than one fulfillment center.
There are three main advantages to utilizing multiple fulfillment centers.
Expedited Shipping
How fast (or slow) are your standard delivery options? According to Deloitte’s 31st annual holiday survey, 83% of shoppers consider fast shipping to mean delivery within two days or less. With the explosion in ecommerce today’s shoppers have many choices when it comes to where they can buy their products from. There is nothing stopping them from leaving your site to find competitive online sellers who can deliver with expedited shipping. If you can’t deliver your products in less than 48 hours, you can most likely expect to see a drop in sales.
Ultimately, the faster a customer gets their order, the happier they will be. If your customers don’t all reside in one geographical region, having a large network of fulfillment centers is really going to help you with this. Having a 3PL with a national network of fulfillment centers guarantees that every time a customer places an order online, it will automatically be fulfilled from the fulfillment center closest to that customer. This significantly reduces delivery times which will help in retaining repeat customers and ensure growing sales.
Split Shipping
Split shipping refers to any shipment with multiple items that have been broken down and split into two or more shipments. This allows orders to be distributed through shipments from multiple fulfillment centers in the event a single fulfillment center is unable to fulfil the complete order.
A 3PL that has a split shipping product feature will benefit you if you run out of stock in a particular fulfillment center. Customers come to a particular business to buy a product. To discover, in the middle of a shopping experience, that this business doesn’t have the desired item can disappoint customers. This leads them to look for an alternative competitor for the product. A lack of inventory means longer waiting times for stock to be replenished. 53% of consumers said that speed of delivery is an important factor when it comes to evaluating their online orders, so stock-outs can almost always guarantee a loss in sales. Split shipping protects you from potential out of stock mishaps. Even when inventory is low in certain fulfillment centers, this feature ensures that orders are immediately fulfilled and delivered to customers as quickly as possible.
Lower Shipping Costs
When you only have one fulfillment center to ship out of, it can take a long time to physically reach your farthest customers. This means higher shipping rates. While it may be a larger initial investment when purchasing inventory to store at multiple warehouses, there are cost savings realized elsewhere. If customers have the option to pay for expedited shipping, there is a significant cost to pay for the rush delivery. High shipping costs are one of the top reasons for shopping cart abandonment, creating an opportunity cost of acquiring customers. Storing inventory closer to your customers helps lower shipping costs—it is almost always less expensive to ship an order 100 miles than 1,000 miles. Of course, having access to a 3PL’s network of fulfillment centers lets you use multiple facilities without paying ad hoc for the infrastructure, staff, and equipment of each warehouse. With today’s expectations, high shipping prices could lead to poor customer satisfaction and retention.
Bottom Line
To be successful in the competitive ecommerce space, many online retailers send their inventory to multiple fulfillment centers. A good outsourced 3PL can help you determine the optimal fulfillment center locations for your business based on your customer base. Distributing your inventory to major metro areas is a great way to ensure your orders are delivered quickly and at less cost.
If you’re looking for a 3PL with multiple fulfillment centers, DCL owns and operates facilities in The Bay Area, Los Angeles, and Kentucky. Use our strategic geographic footprint to house your inventory across the country. It will reduce your transit times and shipping costs.
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.
Tags: warehouse management
