25 Apr Why Cincinnati and Midwest are best for fulfillment centers
The distance your customer’s order must travel has a direct impact on shipping costs and what a customer must pay to get their order sent to them (if a shipper wants to maintain their margin at least). This is a principal reason for locating an e-commerce fulfillment center in Cincinnati or another location in the Midwest. Online retailers, with customers located nationwide, can lower their transit times and shipping costs compared to any other origin around the country – it’s a proven model.
Here’s a simple example. If a package is shipped from a retailer’s fulfillment center in Los Angeles to New York City that’s roughly 3,000 miles. However, when that same package ships from Cincinnati or nearby to the same destination you’ll cut the order’s transit time nearly in half. And, as Amazon has proven, a decrease in shipping time almost always equates to a much happier customer.
By reducing a package’s journey from 30-45% the order arrives faster, builds a stronger customer relationship, boosts margin, and cuts overall costs. When a retailer can pass on a cost reduction, it positions the seller as customer-friendly with a better chance of receiving more business in the future.
What CNN reported 3-years ago has since transformed numerous e-commerce operations
Back in 2016, CNN reported how Ohio was becoming an e-commerce capital – mentioning Cincinnati specifically. Three years after that report was published retail consultants, along with their research continue to aggressively advise their e-commerce clients to make Cincinnati a part of their logistics supply chain network.
The Next E-Commerce Phase: Cincinnati suburbs are seeing many new customer fulfillment centers
Since then, the steps taken by many e-commerce and retailing giants prove the point.
Amazon has made a huge investment in Northern Kentucky (suburban Cincinnati) to create more air capacity for their operations, and possibly as a 3rd party air cargo provider itself.
A few years ago, Home Depot opened a fulfillment center in Luckey, Ohio with the goal of improving the company’s shipping efficiency.
Kroger Co., America’s largest grocery retailer announced it was investing $55 Million to build its first of twenty customer fulfillment centers (CFC) in the United States. They are partnering with UK-based advanced digital and robotic capabilities company, Ocado, the world’s largest online e-commerce grocery retailer. Together their partnership and the CFC shed is the first U.S. customer fulfillment center of its kind providing customers with anything, anytime, and anywhere service. Its size is estimated at 335,000 Sq. Ft. and being built in Munroe, Ohio a suburb of Cincinnati.
E-commerce retailers of all sizes can learn from the big guys
At a large, or small scale, the principles that make Cincinnati a cost-efficient location for a fulfillment center are similar. The big retailers we’ve mentioned chose the Cincinnati area as the result of significant analysis and consideration. Every online retailer needs to care about lowering their shipping costs and shortening delivery times. These business decisions by Amazon, Home Depot, and Kroger make the case for Cincinnati as an obvious first choice for retailers of all types.