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Why are Subscription Box Companies with a Single Fulfillment Center at Risk

author headshot Written By: Harry Drajpuch (CEO, Amware Fulfillment)
Category: Fulfillment
Published on: 07/7/20

Contributed by Gold SUBTA Resource Partner, Amware Fulfillment

 

According to a recent survey report by Internet Retailer, about half of B2C sellers deliver orders nationally from a single shipping fulfillment center.

This strategy limits the delivery speed and increases parcel shipping costs. It also creates a significant risk of a commercial business interruption.

The best example is what’s happening now with COVID-19. If the virus hits that one warehouse’s workforce hard, can you keep orders flowing?

At Amware Fulfillment, several existing customers have recently asked us to spread their inventory across to at least one additional fulfillment center to reduce risk and ensure business continuity.

To be clear, this is not a COVID-19 issue alone. Power outages, floods, earthquakes, and other disasters also create risk if all your inventory is in one location.

Beyond risk mitigation, a multi-location strategy also brings the following benefits:

  • Reduced parcel costs. Since carriers use zones to come up with shipping rates, it’s cheaper for B2C sellers to fulfill orders from a zone that is nearest to the customer. The parcel savings typically outweigh the cost of an added location and inventory.
  • Reduced time in transit. This allows for better customer service as customers would receive their orders faster.
  • Scalability. If you are a growing business, you’ll need an expanded warehouse footprint to accommodate the increased order volume. It might make sense to expand your facility network while setting the stage for continued growth.

These are challenging times, with risks we’re not sure how to deal with; however, if you operate a business with a single shipping fulfillment center, that’s one risk with a pretty straightforward solution.

Spread your inventory across more than one location – either by managing this expansion yourself or partnering with a fulfillment provider that has a nationwide network. It will take some thought and planning to identify the right location and the right split of inventory. But once the reconfigured fulfillment network is in place, your business will be safer.

 

 

Written by Harry Drajpuch, CEO, Amware Fulfillment
Learn more at Amwarelogistics.com

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