Efficiency in all operations is crucial when competing with global e-com markets. You need to tackle many must-win battles in order to compete with the fast growing online market, where anyone can sell anything anywhere.
While the market is spreading, consumer expectations of fast delivery are also increasing. Many online stores are still selling products from one location. This automatically means that someone else can ship similar products faster to different regions in the market.
Shipping orders from one central warehouse becomes inefficient once an online store reaches a certain scale. When an online store is shipping multiple orders worldwide, it is time to think about spreading inventory to more than one location. This is called multi-warehousing or distributing inventory. There are many advantages to multi-warehousing.
Top 5 Reasons To Operate Multiple Warehouses
Using multiple warehouses for online store order fulfillment is great for both you and your customers. By multi-warehousing your products at various locations and shipping from the warehouse nearest to the customer, shipping will be faster and less expensive.
1. Decrease your shipping costs
Managing inventory with multiple locations is usually the best option. You may need to spread the inventory to more than one location, but the final delivery is cheaper. Local deliveries are always cheaper than long distance shipments. You can save money with each order fulfillment by shipping the minimum distance required.
All in all shipping costs decrease as shipment size increases, so moving larger volumes between multiple fulfillment hubs is more efficient than shipping small orders directly from a centralised warehouse to customers worldwide.
2. Fast local deliveries
With multi-warehousing your orders will be shipped to customers faster. Delivery from a local fulfillment center is faster than cross-continental shipping. Customers tend to place significant weight on quick and cheap delivery, so operating with multiple warehouses can also improve the customer experience.
3. Sustainable business with local fulfillment centers
It makes sense to aim towards distribution channels in which physical goods are transported as efficiently as data flows around the web. All items are shipped via the fastest and most efficient route. This can mean that incoming stock always travels a long distance with sustainable freight to more than one distribution center, where they are stored and the end delivery to consumer is done as locally as possible. As well as the possible returns being handled as close to the customer as possible.
4. Manage the warehouse risk
Having your products across markets in different fulfillment centers enables you to manage possible risks with distribution. There might be delays with incoming goods transit or for example natural catastrophes that prevent a freight company from delivering items to the warehouse. At some point, even if unlikely, a strike, winter storm, flood, wildfire, earthquake, or even local holidays might impact some of your orders. More likely, though are the problems that occur inside the warehouse, such as fire, water damage, personnel shortage, seasonal peaks, etc. When you manage your inventory with multiple locations, you will have a backup inventory in other warehouses. Managing risk with delays or lost stock, it is better to be safe than sorry.
5. Try new markets with minimum risk
Multi-warehousing with a 3PL company enables you to reach new markets easily and with minimum risk. Instead of setting up your local presence all over the world, you can use a ready-made and developed 3PL concept with multi-warehousing. Just ship part of your inventory to selected fulfillment centers and start marketing. The local knowledge of the best sipping methods in that area is also available.
When outsourcing your online stores order fulfillment to a 3PL provider, you might think the more warehouses you use, the more complexities you encounter. However, there are many advantages to choosing a single 3PL with multiple warehouse locations.
When it comes to selecting the warehouse location, one of the most important considerations is whether it’s near your customers. Since your customers are likely not in the same region, using one fulfillment center can make it nearly impossible to efficiently reach the majority of your customers. When using multi-warehousing, each time an order is placed on your online store, the closest warehouse will automatically fulfill the order.
Learn more about OGOship's multi-warehousing options and how you can reach your customer quickly and cost-efficiently all around the world.