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Shipping from Multiple Locations Equals Efficiency

The expectations of today’s e-commerce customers are changing the shipping landscape.  The former delivery window of 5-7 days is no longer considered acceptable, and deliveries within 2-3 days have become the norm for ecommerce deliveries.

Amazon is partially the reason for the change in consumers’ demands.  The giant retailer keeps shortening their delivery window (offering same-day delivery on certain items to certain locations) because they have built numerous fulfillment centers that are closer to their customers.  This not only shortens delivery windows, but also drives down shipping costs.   Amazon Prime, the company’s subscription service, has further shortened the delivery time to 2 days or less.  Other retailers are trying to compete, sometimes using a 3PL partner or warehouse provider to shorten delivery times.

One way to reduce delivery times is by having multiple shipping locations.  Technology provided by a 3PL can help to make the shipping process more efficient as the ability to manage and provide inventory visibility shortens delivery periods.  Ecommerce retailers need access to a centralized inventory so that it is accessible to every channel in their network.

Macy’s, the clothing and home goods retailer, is one example of how the use of inventory management has helped the company become more efficient.  They have seen the following advantages:

  • Store employees are able to check the system for product availability. Once they have located the item, they can make it available for either delivery or pickup.
  • Allowed for a decrease in inventory write-off and markdown expenses. Mis-located items can be sold either online in other stores.
  • Store inventory items are available to fulfill online orders on their website, even when fulfillment centers are out of stock on the item.

Some retailers find that their retail locations can double as distribution centers.  They are able to ship items to their customers from retail locations, transfer items from store to store, and enable customer pickup from online purchases.

While distribution is important, order and transportation management systems can also be made more efficient by consolidating inventory and streamlining fulfillment process.  These systems support the increasing demand of e-commerce order fulfillment and allow companies to expand this part of their business.  E-retailers must find ways to make their customer deliveries quicker and more cost-effective.

Technology must be properly managed in order to avoid skyrocketing costs.  According to a study conducted by EKN research, 80% of retailers in the study saw an increase in order management and fulfillment costs as compared to the year prior.   Nearly half of these retailers said their biggest challenge was developing fulfillment processes that satisfy consumers’ expectations for free shipping.

While costs for these processes are rising, they are also becoming more complicated for retailers to manager.  Retailers cited order cycle time, the lack of visibility across functions, and inventory mismanagement as some of their greatest issues with order fulfillment.

Therefore, retailers need the right 3PL or warehouse partner to make the order and inventory management processes as efficient as possible.  When selecting a partner, it is important that they have the knowledge and skills, along with the proper technology to ensure these processes happen to get the products to the customers on time.