What Are the Benefits of Having Multiple Distribution Centers?January 1, 2020
Fulfillment Works has two warehouse facilities: one on the west coast in Reno, NV and one on the east coast in North Haven, CT. When it comes to pros of multiple distribution centers, speed is the biggest one. By having “distributed inventory” in multiple locations, your business has the flexibility of goods being shipped from the closest location possible to the buyer, and therefore their orders will arrive more quickly.
A con for distributed inventory is making sure enough product is in each of your fulfillment partner’s locations to meet demand of various regional buyers. This requires technology and expertise to get it right. If it’s not done well, it can cost unnecessary time and money, which is why it’s so important to have a capable partner to handle the inventory and fulfillment logistics.
Pro: Lower Costs
Beyond speed, distributed inventory means lower shipping costs. If your distribution centers are close to your customers, the goods travel less distance and you can offer free or lower-cost shipping. The ability to profitably offer free shipping is a major pro of multiple distribution center models for order fulfillment.
Pro and Con: Inventory Risks
Another benefit is that distributed inventory lowers some risks. By having inventory available in multiple distribution centers, you have redundancy of product to safeguard against emergencies and natural disasters. If you run low in one location, there is more product elsewhere to help make up the difference. If there is a regional problem, however, such as fires, hurricanes or snowstorms, there is product elsewhere available to deploy. These benefits mean you will have less risk with delayed or backordered products.
A con, however, is having more inventory sitting and aging, which can be an issue for goods that cycle quickly, such as perishable, seasonal, or are subject to new versioning over time (like electronics).
It’s important to evaluate these pros and cons depending on the kind of products you sell.
Con: Costs and Savings
Another con of multiple distribution centers is that there are additional costs for warehousing product in several locations. It’s essential when weighing your option to measure any savings in time, shipping and costs against the additional costs of having order fulfillment taking place in multiple locations.
Ultimately, multiple distribution centers have both pros and cons for ecommerce businesses. The benefits, however, outweigh the negatives. Having distributed inventory should be carefully considered to make the most of your customers’ experiences and your business’s ability to deliver goods quickly, accurately, and at great value to your buyers.