E-Commerce is an industry driven by speed, efficiency, and convenience.
If e-Commerce is how you make your living, then everything depends on the cost of storing, filling and transporting your inventory, and how fast you can deliver it to your customers.
Where to Position Your e-Commerce Fulfillment Shipping Locations
Product sourcing and efficient shipment delivery are the biggest obstacles for e-Commerce retailers large and small.
When combined with the rising cost of transportation and a crippling lack of available warehousing space it can be nearly impossible to turn a profit and provide quality service to your customers.
What to Consider
According to Annual State of Logistics Report, compiled by the Council of Supply Chain Management Professionals, of the $1.45 trillion spent on warehousing and shipping in the United States, $900 billion is spent on shipping and transportation costs.
The substantial cost in transportation comes from the increase of e-commerce shipments to customers who do not live within a feasible range of the warehouse that stores and distributes the product.
To stay competitive e-Commerce retailers must offset the cost of transportation and warehousing.
The larger online retailers accomplish this by positioning their e-commerce shipping locations as close as possible to their customers.
The largest online retailers also possess the buying power to dictate shipping costs to shipping providers like UPS, FedEx, and DHL.
However, the vast majority e-commerce retailers do not have the buying power to dictate the cost of transportation; nor do they possess the means to open a new fulfillment center every time they expand their customer base.
Thus, the solution to the rising cost of e-Commerce shipping and fulfillment for many online retailers is outsourcing their logistics to a third-party fulfillment center.
How to Find the Best e-Commerce Fulfillment Shipping Locations
Third-party fulfillment centers are springing up all over the United States to meet the rising demand for efficient, cost-effective fulfillment services.
However, as the old saying goes, the most important thing to remember when choosing a third-party fulfillment center is “location, location, location.”
An e-commerce fulfillment shipping location that is too far from your customer base will increase the cost of shipping.
Whereas a fulfillment centers at the heart of major population centers are likely to cost more in terms of the cost per square foot of warehousing space.
Where you decide to position your fulfillment shipping location is essential to success as an e-commerce retailer, but to find the right place you need to start with some data
Ship-to Location Data
Ship-to location data enables e-commerce retailers to determine the viability of utilizing a specific e-commerce fulfillment shipping location and the associated costs such as:
Freight & Fuel Market trends – Market trends determine the availability of carrier service providers in a geographic area.
Proximity – The proximity of a warehouse to major population centers and transportation hubs are critically important in determining the cost of land, labor, and transportation.
Land, Labor & Transportation – Real-estate is always more costly near the water and major population centers.
Warehousing space and labor are in short supply and high demand in the areas that are in close proximity to major population centers, and transportation hubs.
Storage & Inventory Costs
In general, an e-commerce retailer should position their fulfillment shipping location as close to their customer base as possible to offset transportation costs.
However, e-Commerce retailers typically service customers in a range of different locations. Therefore, many e-Commerce retailers are forced to store their inventory in multiple locations.
Unfortunately, for many small to medium size businesses restructuring an entire distribution network to service a small number of far-flung customers is rarely a feasible business strategy.
Considering the rising cost of transportation and warehousing space, the cost of storing inventory in multiple locations can grow to unmanageable levels very quickly.
The only solution e-commerce retailers in need of multiple fulfillment centers is to unleash the power of on-demand warehousing.
The Solution is On-Demand Warehousing
On-Demand service is quickly becoming the new standard for transportation and warehousing.
On-demand warehousing enables a business to quickly increase their warehousing and distribution capacity in regions expecting a drastic increase in demand, or the opposite should they be expecting a drastic drop in demand.
By utilizing on-demand warehousing, e-Commerce retailers can position their fulfillment shipping locations where they will most effectively respond to demand without exerting the extra cost, time and effort of securing additional warehousing and transportation for their inventory.
Flowspace will help you get into a fulfillment center that will be close to your customers to save on shipping costs. Get a free quote today!
Written By:
Allison Champion
Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.
