When outsourcing order fulfilment to a third-party logistics provider (3PL), you may believe that the more fulfillment centers you have, the more complexity you will face. However, with the growth of your business, so will your inventory, and you may find that one fulfilment centre is insufficient to meet your demands. The truth is, partnering with a third-party logistics provider (3PL) and having multiple fulfillment centers actually offers numerous benefits for streamlining and lowering your order fulfillment expenses.
First of all, when it comes to fulfillment center location, one of the most crucial factors to consider is whether it is close to your customers. Because your customers are unlikely to all live in the same geographic location, using only one fulfillment center or your warehouse might make it difficult and costly to reach people who buy from you.
Using distributed inventory, on the other hand, implies storing products in multiple fulfilment centers at the same time, so that each order is completed by the center nearest to the customer.
In addition, when considering expanding to various fulfilment centers, space may not be your only worry. Shipping charges that are excessively high and delivery timeframes that are excessively slow may also influence your decision. That is why distributing your goods across multiple fulfillment centres may be the best answer.
You might believe that having more than one fulfillment center will just double or triple your inventory costs, with little chance of saving money elsewhere. However, working with a third-party logistics provider (3PL) for your multi-center fulfilment needs could significantly lower your costs while freeing up your time to focus on marketing, customer care, and sales operations. Continue reading to find out why many ecommerce businesses work with a third-party logistics provider and store their inventory in more than one fulfillment center.
A third-party logistics provider (3PL) fulfilment service involves order processing, packing, and shipping to ensure that your products reach clients as soon as feasible.
If you want to reduce your transit times and shipping costs, contact SPExpress today to check out how we can help your company grow.
Continue reading to learn more about the benefits of using multiple fulfillment centers.
1. Reduce the possibility of inventory issues
Having inventory spread among 3PL fulfillment centers gives you options if your orders are unable to depart from a specific fulfillment center. For example, inclement weather that we might all have experienced in Canada is the most obvious example that creates delays in shipments.
While you divide your inventory across geographic zones with multiple fulfillment centers,
You will have backup inventories in different locations and ship on time. Delays caused by lost stock, backordering, or manufacturer delivery issues will also be reduced.
2. Allows for high order volume fullfillments
Consider the number of orders you ship as well as the various locations to which your products are transported. This will allow you to calculate the number of orders you’re shipping to remote locations at a higher cost. Using numerous fulfilment centres allows you to choose a location that is convenient for your buyers. By keeping your supply close to buyers, you can cut shipping costs because orders will not have to travel as far to be dispatched.
If your order volume is high and stable enough, it is probably more cost-effective to distribute your inventory across many fulfilment sites.
3. Reduce overall shipping costs
While purchasing products to keep in multiple fulfillment centers may require a bigger initial investment, there are cost savings gained elsewhere.If buyers have the option to pay for an expedited shipment, the cost of the quick delivery is high. High shipping prices are one of the leading causes of shopping cart abandonment, resulting in a customer acquisition opportunity cost. When you only ship from one warehouse, it can be expensive to reach your final consumer. Keeping inventory local to your customers reduces transportation costs.
On the other hand, having access to a third-party logistics provider (3PL) network of fulfilment centres allows you to use various facilities without having to pay extra for each warehouse’s infrastructure, staff, and equipment.
4. Increases Your Options for Early Delivery
Many online shoppers nowadays demand two-day shipping and other expedited delivery alternatives. Online merchants can store their items closer to buyers by using multiple fulfilment centres, dramatically reducing transit and/or delivery times. Faster turnaround times may increase your customer base and enable you to compete with larger, more established players in your sector.
For example, if you use multiple fulfillment centers in major cities such as Toronto, Montreal, or Calgary, you may more readily reach large populations across the country. Because the inventory is close by, it is simple to have a shipment delivered the same day to those who live in these cities or surrounding states. The faster a consumer receives their order, the happier they are. If you can provide a short turnaround time without requiring expedited shipping, which is an expensive addition for any distance, you may see an increase in sales and a reduction in shipping costs.
If your client base is spread over various regions and nations, and you have many fulfilment centres, each order will be fulfilled by the centre nearest to the customer. This means it will arrive faster and at a reduced cost.
5. Assists with Inventory Management
Having your goods dispersed over different fulfillment centers can also come in helpful with your inventory management.
Many ecommerce businesses send their inventory to fulfillment centers in order to be successful in managing their inventory and be competitive in the ecommerce industry. Based on your customer base, a good outsourced order fulfilment provider may assist you in determining the best fulfilment centre locations for your company. Distributing your inventory to major metropolitan regions is an excellent approach to ensure that your goods are stored where orders can be delivered quickly and affordably.
If you’re looking for a third-party logistics provider (3PL) or expanding your fulfillment center, SPExpress has the right level of expertise to offer exceptional supply chain solutions that are custom-tailored for your business, including 3PL services, with warehousing, distribution, and fulfilment services in Canada. Contact us and get a free quote from us today.