Many ecommerce businesses ship from just one location—even a home or office—when they first launch. However, as a company grows, scaling self-fulfillment can be difficult. A DTC brand that wants to last must have its eyes on efficiency, speed, and costs associated with a well-oiled fulfillment process. Storing and shipping your goods from more than one fulfillment center can help you meet your business goals and exceed customer expectations. Find out how an ecommerce fulfillment provider can take care of the logistics associated with multi-warehousing so you get all of the benefits and none of the headaches.
Multi-warehousing refers to using multiple warehouses strategically located across a region—or the globe—to store inventory and fulfill orders. Whether you're outgrowing your current warehouse or looking to optimize shipping costs, multi-warehousing can be a unique solution to many problems.
Multi-warehousing is typically used by companies that have customers spread across regions. Though there are many benefits to multi-warehousing a primary one is streamlined fulfillment and simplified warehouse management. This includes operations, staff, inventory management, and shipping of goods.
Though it may seem like having multiple warehouses would complicate the process, a 4PL will act as a single point of contact for your company—managing all of the operations that goes into multi-warehousing. You’ll work with your 4PL to distribute goods to multiple fulfillment centers in different areas of the country and the world. These fulfillment centers are chosen to reduce the shipping zones, costs, and time needed to get a package to the end customer. This can help you to achieve faster shipping times as well as reduce shipping costs.
There are multiple benefits of multi-warehousing, particularly as your ecommerce business reaches a certain scale.
When you decide to transition your ecommerce fulfillment process to a multi-warehouse strategy, you’ll enjoy the following benefits:
Major carriers, like UPS, USPS, and FedEx, price the cost of shipping goods according to shipping zones. These zones are measured by the distance between the shipping ZIP code and that of the final customer. By having your inventory in multiple locations, a multi-warehouse shipping strategy allows you to send items from a warehouse that’s closest to the final destination.
You may have an initial cost in shipping to multiple warehouses or ordering enough inventory for multiple locations. However, as the scale of orders grows, your overall shipping costs reduce over time. In addition, this allows you to offer cheaper shipping options to your customers. Shipping costs are among the key factors that help customers decide whether to buy or abandon their shopping cart.
Because distributed warehouses tend to be closer to the end customer, carriers can deliver orders sooner. Customers expect fast delivery, so this can be an important benefit that allows you to compete more effectively with competitors relying on one single distribution point. When you provide quick delivery for most customers, they're more likely to be satisfied with your business and the items they received.
Once your ecommerce business reaches a certain size and scale, it's no longer efficient to ship your goods from only one central warehouse. Spreading inventory to more than one location through multi-warehousing makes it easier to scale up your business as it grows.
Not to mention, if you’re thinking on an international scale, the costs saved by avoiding overseas transport and customers cannot be overstated. International shipping is expensive. But if you have warehouses distributed across the globe you can massively reduce costs.
Many customers aim to reduce long-distance shipping by choosing a local, less carbon-intensive option. Multi-warehousing enables you to have a smaller footprint with each package that you ship. Returns and deliveries are handled as close to the customer as possible while the original shipments to multiple warehouses can take place with more sustainable options.
Multi-warehousing helps you to better manage potential risks anywhere along the distribution chain. In the case of a natural disaster, warehouse issue, or transportation problem in one area, other warehouses can pick up the slack and prevent delays in reaching your customers. Whether there are fires, floods, rail service problems, winter storms, or other issues that stop traffic and distribution in one area, your redundant system enables you to manage risk more efficiently and safely.
When you employ multi-warehousing with an ecommerce fulfillment provider, it's just as streamlined and simple to understand your inventory as it is with just one warehouse. You can instantly view your inventory throughout the entire operation, plan for goods transfers between warehouses, and schedule your next shipment to warehouses.
Reducing shipping costs and shipping times are important goals for ecommerce businesses and their customers. High shipping fees and lengthy delays are common causes of customer dissatisfaction, so multi-warehousing can be a boon to businesses that want to cut down on the cost of shipping each package and offer customers in various locations a more reliable and clear shipping time estimate.
Of course, this means determining which of your products will be shipped from multiple distribution centers, whether you have the depth of inventory needed to stock distributed warehouses, and whether all of your items should be multi-warehoused. Your ecommerce fulfillment provider can work with you to develop a plan for multi-warehousing that best meets your needs, financially and in terms of efficiency.
When you outsource your shipping and fulfillment to a 3PL, you reduce complexity significantly. Your fulfillment provider provides you access to manage your inventory in different locations remotely, check on the status and stock levels of your goods in distributed locations, and ship items from one warehouse to another depending on demand.
Selecting the right warehouse locations for your business means choosing sites near your customers. You can work with your 3PL provider to assess your data about where your customers live and which items they are most likely to order to enhance the efficiency of your distributed warehousing.
Your ecommerce fulfillment provider can integrate with your platforms, such as Shopify, Squarespace, or WooCommerce, to give you a clear overview of your inventory at any time and the demand for your products in different locations. All of your updates come in instantly in real-time. An ecommerce fulfillment provider gives you the highest level of control and efficiency when distributing and shipping your items.
Offering customers free shipping is one way to demonstrate how valuable they are to the brand. It’s also a good method for increasing customer conversion rate and reducing shopping cart abandonment. Multi-warehouse shipping further contributes to increased customer satisfaction because it allows businesses to deliver orders faster. Remember, when a package is fulfilled by the warehouse closest to the customer, it has a much shorter distance to travel.
The simplest definition of distributed inventory is simply product that’s stored in multiple locations to enable more efficient order fulfillment, while multi-warehousing is the strategy of using distributed inventory. However, some 3PLs that advertise "distributed inventory" are referring to an operating system in which they control where an ecommerce brand's inventory is stored and where it ships from.
Learn more about difference, and the pros and cons of 3PL distributed inventory, on the Airhouse blog.
Multi-warehousing can help your ecommerce business to compete successfully in a crowded DTC market. Connect with a fulfillment expert at Airhouse to find out how you can get started on cutting shipping costs and time while increasing efficiency with multi-warehousing.
Find tips, tricks, and advice for building scalable operations at your modern ecommerce company.
Companies like yours are automating their operations with Airhouse, so they can focus on scaling their brand.
Airhouse makes it easy to hit the ground running with native cart and shipping carrier integrations.