Why are E-retailers with a Single Shipping Fulfillment Center at Risk?

March 24, 2020 by Amware Fulfillment

Internet Retailer recently polled 100 E-retailers about their fulfillment networks. According to the survey report, about half of those businesses deliver orders nationally from a single shipping fulfillment center.

Not only does this strategy limit delivery speed and increase parcel shipping costs, it creates huge risk of a wholesale business interruption.

The best example is what’s happening now with COVID-19. If the virus hits that one warehouse’s workforce hard, can you keep orders flowing?

shipping fulfillment centerAt Amware Fulfillment, several of our existing customers have recently asked us to spread their inventory across at least one additional fulfillment warehouse in order to reduce risk and ensure business continuity. With 15 facilities across the U.S., we can accommodate such requests. 

To be clear, this is not a COVID-19 issue alone. Power outages, floods, earthquakes and other disasters also create risk if all your inventory is in one location. 

Beyond risk mitigation, a multi-location strategy also brings the following benefits:

  • Faster delivery time. Many consumers have been conditioned to expect delivery in 2 days. That’s simply not possible, nationwide, with a single shipping fulfillment warehouse.
  • Reduced parcel costs. Since carriers use zones to come up with shipping rates, it’s cheaper for E-retailers to fulfill orders from a zone that is nearest to the customer. The parcel savings typically outweigh the cost of an added location and inventory.
  • Scalability. If you are a growing business, you’ll need an expanded warehouse footprint to accommodate the increased order volume. It might make sense to expand your facility network at the same time to set the stage for continued growth.

These are difficult times, with risks we’re not even sure how to deal with.

But if you operate a business with a single shipping fulfillment center, that’s one risk with a pretty straightforward solution.

Spread your inventory across more than one location – either by managing this expansion yourself or partnering with a fulfillment provider that has nationwide network. It will take some thought and planning to identify the right location and the right split of inventory. But once the reconfigured pick and pack fulfillment network is in place, your business will be safer.

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Filed Under: Parcel Shipping for eCommerce, Fulfillment Services