How to Choose the Best Location of a Fulfillment Center When You Outsource to a 3PL

There are many questions you should ask when evaluating potential third-party logistics (3PL) providers. Aside from aspects such as pricing and ecommerce store integrations, another very important consideration is location.

The location of a fulfillment center plays a major role in whether an ecommerce company is successful. Read on to learn how geography impacts order fulfillment, and gain tips to make a strategic decision.

How do you choose the best location of an order fulfillment center?

The biggest factor in choosing a fulfillment center location comes down to one question: Where are your customers?

The logic behind this is the less distance a package travels, the quicker it gets delivered to your customer and the less money you have to pay for shipping. The more you sell, the more time and money you’ll save.

Today’s customers not only crave convenience and speed with deliveries, but also expect it. Being near the majority of customers, or located near major hubs or metro areas that can reach large volumes of customers, will help ensure shoppers get the quickest turnaround time possible.

Do you need to be located close to your 3PL’s fulfillment center?

No, being near your 3PL is not a requirement (though there is nothing wrong with it). In other words, if you’re an Atlanta-based ecommerce merchant, your fulfillment center does not need to be in Atlanta.

Similarly, another consideration is whether you should choose a fulfillment center that is close to your manufacturing plant. Though it may cost less money to ship your products to the 3PL from the manufacturer, this isn’t necessarily how you should make your decision.

For products that are manufactured abroad, it’s unlikely that the majority of your customer base is all that close to the manufacturer. Importing to a coastal city or port city is an added bonus when inventory is coming from across the ocean, but again should not be the only factor in making a decision.

When should you use more than one fulfillment center?

When you are first getting started, working with a single warehouse may be all you can handle. As you grow, you may need to send inventory to other strategically located fulfillment centers. This concept, known as distributed inventory, has become a game changer for ecommerce merchants.

How to Choose a Fulfillment Center Location When Outsourcing to a 3PL - ShipBob

Splitting inventory across warehouses has several benefits, especially as many online shoppers expect two-day delivery. You can choose to send only certain SKUs (e.g., the most popular or highest selling products) to certain fulfillment centers. If one fulfillment center ever runs out of a product, you still have the others to serve as backups.

However, distributing inventory across fulfillment centers doesn’t mean using multiple 3PLs – choosing a single 3PL with multiple locations will help unify systems, technologies, and communication. This helps ensure greater accuracy, transparency, and consistency in service.

The key to understanding when and where to send inventory is to continuously analyze metrics to gain insights into sales. This includes paying attention to any geographic shifts and growth.

You must let the data guide your decisions.

Conclusion

If your customers are like most consumers, they want a fast turnaround after they check out online. If you want to succeed, you need to make customer preferences a priority.

Fulfillment center location plays a crucial role in meeting these expectations. The closer your product is to your end customer, the less distance it travels, the less money you and your customers have to pay for shipping, and the faster it arrives at your customer’s doorstep.

Finding an outsourced order fulfillment solution that fits this model is key.

Learn more

Distributing inventory creates a win-win for all and is the first step toward faster fulfillment. Download the white paper, “Why Distributed Inventory is a Game Changer for Ecommerce” to learn more.

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P.S. In need of an ecommerce fulfillment partner? ShipBob owns several fulfillment centers across the continental US, with many more in the works. In addition, ShipBob’s free software provides:

  • Reports and analytics on the optimal locations to send your inventory
  • Real-time visibility into inventory levels across fulfillment centers
  • Automatic, proactive notifications when inventory starts to get low at each fulfillment center so you can restock
  • And much more!

Get in touch with ShipBob today and learn how you can simplify fulfillment and meet customer expectations.

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