How to Choose Locations for Your Fulfillment Warehouse
You know what they say: location is everything! This is especially important when considering the right location for your fulfillment warehouse. Whether you’re a large company looking for a new fulfillment warehouse or an eCommerce startup finally branching out from your garage, the location of the fulfillment warehouse (or 3PL, third-party logistic provider) that you outsource your storage and shipping to can have a significant impact on your business.
The Case of the Florida Candle Company
Before we dive into the questions you should ask yourself before choosing a fulfillment warehouse, let’s take a look at a scenario involving the fictional company Florida Fragrances. This small Tampa-based company sells candles with Florida-inspired scents like Ocean Breeze, making, storing, and shipping them from a small storefront location.
The scents are a hit with Floridians, and as word spreads across the state, the owner Bonnie decides to also sell them via eCommerce, outsourcing warehousing, packing, and shipping to a local Florida fulfillment center. Everything is going great, until a lucky break on Shark Tank…
Now, the entire country is aware of Bonnie’s Florida-inspired candles, and it turns out everyone wants to bring a little bit of the Sunshine State into their home. Unfortunately, shipping only from a Florida fulfillment center is hurting her business, as customers on other coasts balk at the shipping fees and the delivery times.
To accommodate customers across the country, Bonnie finds a 3PL service provider with fulfillment warehouses located in the center of the country and on each coast; it costs her a bit more, but by being able to get her candles to her customers quicker and for less, the expense of having multiple fulfillment warehouses more than pays for itself.
Five Factors to Consider when Choosing a Fulfillment Warehouse
Now that you’ve seen how a fulfillment warehouse strategy can greatly impact a business, let’s take a look at all the factors to consider.
The Location of Your Customers
Our candle company example illustrated the importance of customer location. So, it’s important to map out where your customers are based on deliveries. Are you serving customers in particular U.S. cities, across the country, or across the world? We’ve all experienced the frustration of waiting a week or more for an order, or even upwards of a month for something coming from overseas, so you want to be sure to offer your customers better.
The Importance of Delivery Time
Unless you’re serving a very niche audience who have very few options when purchasing products, you need to be able to ship quickly. This is especially true if you’re on Amazon or eBay—or competing with them. Of course, it may depend on what you’re selling.
For example, 6% of consumers say they will wait no more than 24 hours for delivery of household items like toilet paper, but only about 1% expect clothing or electronics deliveries to arrive that fast. Another study shows that three days or less is the most acceptable timeframe for most consumers.
The Importance of Free Shipping
No one wants to pay for shipping. In fact, in a survey of nearly 3,000 U.S. consumers, the majority of respondents (50.2%) said free shipping was the most important factor in their online purchasing decisions.
Of course, you don’t want to be footing large bills just to offer free shipping, either, so you may want to consider having a multiple 3PL strategy. That’s because UPS and FedEx base shipping rates primarily on zone; the greater the distance between your fulfillment warehouse and your customer, the more zones you’ll have to cross and pay for.
The Importance of Packaging
For many eCommerce sellers, the first tangible experience your customers will have with your brand is when the package arrives at their door—and a battered, brown box wrapped in a mess of tape isn’t going to leave a good impression.
So, when considering a fulfillment center, it’s important to also consider their ability to offer customized packing, which builds brand recognition, creates loyal brand advocates, and tailors the customer experience. Learn more about the importance of packing in our blog How to Elevate Your Brand Through Customer Packaging.
Inventory Management Ability
After you’ve considered factors 1-3, you’re probably going to ask yourself: “How many fulfillment centers do I really need?” To answer this question, you’ll need to consider your ability to manage inventory, planning ahead to make sure your products are where they need to be—when they need to be.
For example, if you’re selling Snuggies, you probably don’t want them warehoused in the southern states during the winter months; most orders will probably be coming from the northern areas. Inventory management software can help you to document seasonality of sales and more in order to avoid shipping inventory in bulk from one fulfillment center to another (however, it’s worth noting that the cost of shipping large pallets across the country in these cases is still more than offset by what you can save on shipping individual items from far away fulfillment centers).
Considering Fulfillment Warehousing? Contact the Fulfillment Lab!
The eCommerce market has become increasingly competitive, with every seller looking to one-up the next through faster delivery times, free shipping, unique packaging, and more. To meet a growing need—and to ensure you get great customer reviews—we created fulfillment marketing, which combines expedited shipping, order transparency, and complete customization.
In addition, the Fulfillment Lab has made a global footprint to get your products into the hands of an international audience. Along with our U.S. warehouse fulfillment services, we offer shipping from 12 international locations, from China to Panama. We are experienced in all country rules and regulations, tracking, insurance, taxes, customs, and more to give you peace of mind. Want to learn more? Contact us today.