E-commerce distribution and fulfillment strategy isn’t a “one and done” exercise. The market can change unpredictably from one year to the next, and you’ll need to change with it. There are several ways to thrive with this variability, of course. A universal method is to orient your business around a handful of core “best practices,” which – like taking a “wellness” approach to your physical health – can help make your operations robust enough to keep rolling through good times and bad.
Maximize Your Distribution Footprint
Amazon’s move to two-day shipping left a lot of companies scrambling to catch up. For smaller players with one or two main distribution centers, it’s difficult to match Amazon’s speed of delivery across a large geographic area. Utilizing a number of satellite distribution points, especially in areas where you have high customer density, can help keep you competitive.
Don’t Over-Commit to Warehouse Space
Owning or leasing your own space in core geographic areas is useful, but as your shipping volume and geographic footprint expand, it quickly becomes costly. Worse, the drain on your financial resources can limit your ability to respond to market changes. Instead of negotiating to purchase or lease increased capacity, consider partnering with a warehouse-sharing service. You’ll have real-time access to warehouse space when and where you need it, without paying for excess capacity. Additionally, you can turn any existing excess into a revenue stream by hosting inventory for third parties.
Invest in A “Crystal Ball”
That isn’t as facetious as it sounds. The more closely you’re able to forecast the demand for your products over each planning period – month, quarter, year – the more improvement you’ll see in your operational efficiency. Your management systems software should contain all the data you need to project this year’s sales from previous years’ data. You may need to upgrade its reporting and data-analysis capabilities, which represents an additional cost, but the benefits are significant. With better information in your hands you can plan for better use of available warehouse space, minimize over- and under-ordering, improve your on-time delivery metrics and much more.
Use Multiple Fulfillment Channels
For startups, it often makes sense to simply place product in Amazon’s hands through Fulfillment by Amazon (FBA). As you grow, the potential downsides and limitations Amazon’s system will become more of an issue. Keeping a few key SKUs within Amazon’s system may make sense, especially if they’re Prime-eligible, but you don’t necessarily have to lock yourself into one channel. A multi-channel strategy can keep you nimble and flexible. With some products it might make sense to arrange drop shipping service with the manufacturer, and you might want to keep shipping in-house or partner with a third-party logistics (3PL) company. Keep your options open.
Plan For Scale
“Begin as you mean to go on,” an old aphorism, is still good advice. Your distribution strategy isn’t just a matter of getting products to customers today; it should also provide you with a clear path for scaling up as your sales increase. If you can’t add capacity quickly when needed, you won’t be able to take full advantage of suddenly-hot products, and may run the risk of losing customers and goodwill.
Optimize for Efficient Picking (and Receiving)
Picking is one of the most time- and labor-intensive parts of the fulfillment process, which means it’s also an area where any efficiencies you can find will yield maximum payback. Keeping your most popular SKUs in the most accessible places, closest to the docks, speeds both picking and receiving. So does clustering items commonly ordered together, so your pickers can work efficiently. If you have the resources, investing in automation or specialized machinery can improve the function of your existing warehouse spaces.
Embrace the Available Technology
The challenges inherent to ecommerce distribution all become more manageable when you astutely leverage the technology available, especially the so-called “Industrial Internet of Things” or IioT. Shippers have already used telematics for decades to know where their trucks are, and smart scanning and barcoding have made it easier to track the physical location of units within a warehouse space. IioT takes that to a higher level, potentially providing you with a real-time overview of every product within your system. It’s a powerful tool that makes many of these other “best practices” much more attainable.
Partner With a Superior 3PL
Distribution is a whole set of skill sets in itself, one that doesn’t necessarily coincide with your core business and expertise. At some point in your growth, you’ll have to make a decision whether you want to grow that expertise in-house or outsource it by partnering with a high-quality 3PL.
Outsourcing to a premier 3PL like Taylored Fulfillment Services is a logical evolution of your current distribution strategy. In doing so, you also outsource the implementation of these and other industry “best practices.”
With TFS, you get all of the above:
- A geographic footprint covering the continent, anchored by main distribution hubs on both coasts and encompassing a national network of smaller centers.
- Flexible warehousing that doesn’t require you to own and operate your own space. Aside from our own warehouses, we’re a partner in the FLEXE network, so you never need to worry about finding space for your products.
- Our inventory management and warehouse management software systems provide all the data you need to make informed choices and accurate plans as you grow your business.
- Drop-shipping services and Amazon’s FBA program take the work of inventory handling and warehousing out of your hands. We do the same for all the rest of your SKUs so you can focus on your core business.
- Our current client base ranges from small independent ecommerce sellers to massive chains like Costco and Walmart. Scaling up your distribution network will never be an issue.
- As a leading 3PL, our reputation rides on the efficiency of our warehousing operations—we handle it, so you won’t have to.
- We have the resources to invest in state-of-the-art technology. That enables us to provide efficient, accountable service up and down our portion of your supply chain, from the moment we receive the product from your suppliers to the moment it reaches its destination.
Contact us today for a consultation and learn how we can draw on our quarter-century of leadership to help your growing company.