Splitting your inventory across multiple fulfillment center locations, known as distributed inventory, can offer many advantages to an ecommerce seller.…
How Using Multiple Fulfillment Locations is Actually Simpler than Just One
When outsourcing order fulfillment to a 3PL, you may think the more warehouses you use, the more complexities you encounter. The reality is using a single 3PL with multiple locations offers many advantages to streamline and reduce costs on order fulfillment.
When it comes to fulfillment center location, one of the most important considerations is if it’s near your customers. Since your customers likely don’t all reside in a single geographic region, using one fulfillment center can make it difficult and costly to efficiently reach the all who buy from you.
Instead, using distributed inventory means storing product in many fulfillment locations at one time, so that each order will be fulfilled by the center closest to that customer. Read on to learn why many ecommerce companies store their inventory in more than one fulfillment center.
1. Lower the risk of inventory issues
Splitting inventory across warehouses helps your team be prepared. There are always last-minute logistics corrections that need to be made based on any number of internal or environmental factors. Having inventory in multiple locations gives you options in the event that your orders can’t leave a particular fulfillment center—the most common example is bad weather.
When you split your inventory across geographic areas, you will have backup inventory in other locations. This will also limit delays due to lost stock, backordering, or manufacturer shipping issues.
2. Lower your overall shipping costs
While it may be a larger initial investment when purchasing inventory to store at multiple warehouses, there are cost savings realized elsewhere.
When you ship from only one warehouse, it can be costly to reach your end customer.
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.
3. Get your orders shipped to customers faster
With today’s standard and expectation of two-day shipping, a longer time in transit can prevent your customers from buying from you. Using multiple warehouses allows you to store your product close to your customer, which can significantly reduce delivery times.
For example, if you use fulfillment centers in a hub like New York, Chicago, or Los Angeles, you can more easily reach large populations in different areas of the country. It is easy to get a package delivered the same day to people who live in these cities, or in neighboring states, because the inventory is already close by. Alternatively, if your inventory is only in New York, imagine how much longer it will packages to arrive to your customers who live in California.
Ultimately, the quicker a customer gets their order, the happier they are. If you can offer a quick turnaround time – without using expedited shipping, a very costly addition for any distance – you might just see a surge in sales.
To be successful in the competitive ecommerce space, many online retailers send their inventory to multiple warehouses. A good outsourced order fulfillment provider 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.