Amazon has once again set a standard in the way that orders are warehoused and shipped to customers. For Amazon, yes multiple warehouses makes sense and is a huge reason customers get their orders so quickly. Just because Amazon does it, does not mean you as an online retailer need to follow suit. Lets look at the pros and cons of centralized warehousing (one location) and multiple location warehousing.
Multiple warehouse locations
Pros: Products are stored closer to your customer which gives you the ability to get all products to their destinations within 1 or 2 days.
Cons: The biggest and most notable downside of utilizing multiple warehouses is the amount of inventory that you are going to have to carry. On average companies will need to carry an extra 20% of inventory at each location. Running out of stock at one location and having to ship those orders from a further location, will cut into your bottom line due to the investment of carrying stock at two warehouses.
Companies usually are interested in multiple locations so that they can reduce their cost of postage, since the warehouses will have a shorter distance to the end destination. There is a major misconception here when it comes to the actual savings that will be had by having multiple locations. You don’t want to be blinded by the fact that you now have to send multiple shipments to multiple locations, have them inventoried and stored. These costs will be unique to all locations which cuts into that savings you think you’re getting on postage. In fact you may not be saving money at all, after you calculate the cost for all of these shipments to each warehouse location. The postage costs savings are going to have to be very high to warrant the need of multiple locations.
Centralized warehousing
Pros: Having one location for all of your warehousing and fulfillment makes the management of inventory and shipping simple and fast. You can hold a lower amount of stock on hand which means your cash isn’t wrapped up in stock spread all across the country. Inbound deliveries will be cheaper since you will only have one destination where all your products are sent to. The understanding of your inventory will be easier and you won’t have to be a rocket scientist to project stock needs since the information will be centralized.
Using a location that is centralized like the Ships-a-Lot warehouse, you will still be able to meet demands of having products to 90% of your customers within 1-3 days. You can always give the customer the option for overnight or priority 2 day if they are in a remote location. The Amazon standard of shipping can still be met using a centralized warehouse.
Cons: Slightly slower shipping times to few your customers.
Ships-a-Lot single location warehouse
The Ships-a-Lot warehouse is located in Memphis, TN. This location gives us the ability to ship products on the same day and has 90% of those deliveries be made within 1-3 business days. Our one locations make it easy for you to manage inventory and carry a lower amount of stock. Our location is also neighbors to the FedEx Superhub which gives us many advantages when it comes to getting orders to their destination faster. You can compete with Amazon Prime without the Amazon network, contact us today to get started!
