The cost of international shipping has decreased dramatically in the last six months—in some cases costs are down 60% or more. This impacts ecommerce businesses in big ways: brands now have a lot more freedom to import products into multiple ports which opens them up to choosing a distributed inventory model and fulfilling products closer to customers.
The Difference Between Inbound Shipping and Outbound Shipping
Often ecommerce companies separate their operations into inbound and outbound. The two require very different processes.
Inbound shipping refers to any shipments coming into a business. This includes procurement, manufacturing, assembly, storage and inventory management. Inbound shipping often deals with suppliers and vendors—for many brands it’s primarily international relationships and transportation. Returns are also considered inbound shipping.
Outbound shipping deals with customers and distribution channels. It refers to the delivery of finished goods that are shipped out of a business. This includes shipping directly to consumers, retail outlets, online marketplaces, and sometimes even other warehouses and distribution centers.
The Positive Impact of Low Inbound Shipping Lanes
Currently the cost of shipping containers is at an all-time low. This is a boon for ecommerce brands importing goods, raw materials, or products from overseas. Other than general cost savings, low inbound shipping has a direct effect on fulfillment strategy and ultimately customer satisfaction.
With lower international shipping costs, shippers can import to both the East and West Coasts, rather than picking one and relying on domestic shipping (which in recent years have gone up to premium prices).
Getting products into multiple ports naturally decreases domestic shipping costs. It also places products closer to distributed warehouses if you use a distributed inventory model.
In the end, products that import closer to distribution centers can be fulfilled faster and closer to customers. This saves cost, cuts down on transit times, and leaves you with happy customers.
How to Optimize Inbound Shipping Strategy to Save on Cost
For many ecommerce brands, shipping and transportation can end up being a large portion of their overall budget.
Shipping costs change often, which makes them a variable that is hard to manage. There are a few reasons for this:
- shipping base rates are calculated on the market cost of fuel, which changes weekly/daily
- shipping carriers are private companies and can add surcharges or extra fees at their whim
- high-growth ecommerce businesses need to pivot often, which means changing or adding new shipping methods frequently to meet customer demands
The best way to keep your inbound shipping costs in line is to work with the right supply chain partners. Hire reliable and experienced experts to coordinate your freight forwarding, supplier relationships, procurement, and international shipping. If you outsource fulfillment and logistics to a 3PL (third-party logistics provider), they will likely have volume discounts for shipping as well.
When is Distributed Inventory More Effective?
There are many advantages to storing and fulfilling products in multiple warehouses. The biggest one is the ability to fulfill products closer to the customer which cuts down on shipping time and cost.
If you outsource fulfillment to a 3PL, splitting inventory across multiple warehouses usually costs extra. There is also the time and resources involved in getting your products to various locations and properly managing stock levels and inventory on hand.
If you’re considering moving to a distributed inventory model, here are some tips:
- Heavier products, or those that require additional handling, will be more expensive to ship. By reducing the shipping zones to the customer, you’ll save a lot on domestic shipping costs.
- Geography is a big factor. If your customers are in only one general area, one location might make more sense, but if you’re growing into new regions consider finding a 3PL with support there.
- Faster shipping is imperative for some products. If your customers demand quick transit times, distributing your inventory might be necessary.
There are so many decisions to make when managing your inventory. When it comes to distributing your inventory between fulfillment centers, there is not always a clear-cut answer, but by tracking shipping costs and geographic location volume, you’ll be better suited to make an informed decision. Being able to ship orders from multiple warehouses can save you time and money, creating a better order fulfillment experience for both you and your customers.
If you are looking for a 3PL to help with your shipping and transportation, we would love to hear from you. Send us a note to connect about how we can help your company grow. 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.