You may think that using more warehouses when choosing to outsource to a 3PL means that more challenges will be incurred. But the fact is that utilizing a single 3PL with several locations has multiple advantages.
When you are considering options for fulfillment centers, your primary concern is that the center is close in proximity to your customers. But if customers can purchase from you from almost anywhere, reaching everyone from one fulfillment location is a very challenging task to incur with the availability of a single fulfillment center. When you use distributed inventory (multiple fulfillment centers) the one nearest to the purchasing customer can fulfill the order automatically for you.
Distributed Inventory
Keeping in mind the strategy of keeping the inventory closer to the customers, it stands to reason that splitting the physical goods across several strategically picked fulfillments centers would put the products close enough to any customer who may place the order. With the product available nearby, you can get the product to the consumer faster and at a more cost-effective rate. That is the bedrock principle of ‘distributed inventory.’
Instead of relying on one fulfillment center to send products, distributed inventory allows the seller to utilize optimally located fulfillment centers to ship products to consumers.
3 Reasons To Distribute Inventory Across Multiple Fulfillment Centers
- Lower Shipping Expenses: While there is an upfront cost to sending out products to a multitude of fulfillment centers, the savings on the overall cost can be realized elsewhere. Shipping from one warehouse to a customer that is far away will likely take a significant amount of time. If you consider that the current standard is the expectation of two-day shipping, a tough feat to accomplish when sending a package over a great distance, longer delivery time can turn prospective buyers away, or prevent them from making future purchases. Additionally, the shipping costs to the buyer would be high, which, when noted, is a leading reason for cart abandonment of products. When inventory is stored closer to your customers, the orders need to travel over a shorter distance and are therefore almost always less expensive. On top of all of that, access to a 3PL network of multiple e-commerce fulfillment centers permits the use of multiple facilities without the need to pay for the shipping equipment, infrastructure, and staff out of your own pocket.
- Reduce Risk: What if a situation of some sort is preventing your orders from being shipped from a particular fulfillment center? These can include anything from a natural disaster to bad weather, and everything in between. Mother Nature surprises us with everything from snowstorms to wildfires, earthquakes, and hurricanes, and a lot of other unwelcome but very real events quite often. At some point, something is bound to interfere with the product’s timely transit. While not as common, other problems may arise. An electrical fire in the one warehouse you use could completely wipe out your inventory stock. Having multiple locations offers backups, whether they are compensation for lost stock or simply preventing significant delays.
- Faster Shipping: The world is used to a fast shipping turnaround time these days, with two-day delivery being the basic standard. Having multiple fulfillment centers means that your chances of shipping within two days are a realistic possibility.
Conclusion
The expression of ‘don’t put all your eggs in one basket’ holds true in the modern world of e-commerce. Brands who aim to remain competitive and successful stock their inventory in multiple facilities. You can work with a good fulfillment provider to assist you in determining the optimal locations for your fulfillment centers for your business based on the locations of your primary customer base.
