Cost Benefits of Using Multiple Warehouses—When is Distributed Inventory More Cost Effective?

Distributed inventory is an ecommerce inventory strategy that entails splitting product stock between multiple fulfillment centers. Products are stored in two or more facilities in different geographic regions. The opposite of distributed inventory is centralized inventory, where all products are stored in one place and fulfilled from that distribution center.  

Many 3PLs who provide fulfillment support for ecommerce brands will have a distributed inventory option. It’s a great fulfillment method for some, but not all businesses. It certainly costs more to split your inventory, so it’s wise to analyze your overall costs to see if it’s an effective strategy for you.  

Ultimately if you’re a high-growth brand, you’ll want to distribute your inventory at some point, here’s how you’ll know it’s the right time.