Picking a fulfillment center draws parallels to buying a house — but instead of looking for a good school district, granite countertops and a walk-in closet, you’re concerned about inbound transportation cost, transit time to customers and capabilities. In both scenarios, there’s a single shared concern: square footage.
Our network of 154 locations in 45 countries gives you countless options in terms of location, capabilities and space. Our Network Optimization service exists to help you determine the right warehouse location(s) for your business, and the factors below influence that decision.
To ship free, or not to ship free?
According to UPS, the average shopper is willing to wait up to six days to receive an order for which they pay shipping. However, if the wait is seven days (or more), shoppers expect shipping to be free. Another factor to consider is that a reported 44 percent of online shoppers abandon their carts because of high shipping costs.
Solution: A centralized location is key. It will allow you to serve your consumers in a timely fashion and will decrease the zones traveled and therefore the cost of shipping an order. You can also look for a provider with multiple carrier options, giving you more ways to decrease shipping costs. Finally, off-the-shelf rating and routing logic is also a great way to ensure a shipment is being sent using the most cost effective method.
Where is your product coming from?
Inbound transportation costs are a primary consideration when determining strategic fulfillment center locations. Most of the Ingram Micro Commerce fulfillment centers are in major geographic regions. Some companies need to be near ports, others prefer to be in close proximity to a manufacturing plant.
Solution: Assess your inbound transportation to see where your greatest cost savings opportunities exist, then look for a fulfillment center that lessens the geographical distance between your product and where it’s stored. You can also consider other means of inbound transportation, like rail, for a more cost effective option.
A single facility or multiple facilities?
This is one of the most common questions we receive, and it comes down to your needs.
Some companies prefer the simplicity of keeping all their inventory in one place while others intentionally spread it out (e.g., by keeping some on the east coast and some on the west coast). Another strategy is to choose a central location that houses all your SKUs (i.e., Chicago, Memphis or Dallas) in addition to using east and west coast facilities to ship high velocity items.
Using a single location (Carrollton, TX or Millington, TN), FedEx Ground can service 92.2% or 89.8% of the U.S. population in 3 days via ground shipping.
Dividing inventory offers a contingency plan and sometimes enables faster shipping to more (or more highly targeted) customers. The example below shows transit times for a two-location model. In this scenario, our Jonestown, PA and Mira Loma, CA locations are in use, allowing FedEx Ground to service 78.3% of the U.S. population in 3 days via ground shipping.
Solution: The warehouses you use will ultimately depend on your business goals. However, working with a provider that offers options choose from will allow you to expand as your business grows or change locations as needed.
Contact us to learn which Ingram Micro Commerce location(s) best fit your business priorities.