How Many Shipping Points Are Necessary?

Every so often a discussion ensues with decision-makers regarding the number of locations necessary for cost effective fulfillment and customer satisfaction. In the simplest of explanations, only one location is required but considerations for multiple national and international locations can be in order. As fulfillment is customer driven, clients can pass along zone-based carrier cost savings the closer the customer is to the shipping point. Zone based carrier costs are factored here for parcels.

The number of orders, if not the weight, is of course factored as well. If an e-retailer has one SKU that weighs 60lbs and ships 500 orders a month, it’s worth the research on carrier charges with one east coast location and one western location. This simple example of split inventory reflects that which is easier to manage. On the other hand, if there are 2,000 SKU’s involved and most orders weigh less than a pound, not unlikely then one should investigate USPS non-zone services from one location.

Geography has changed enough from carrier service considerations too. Additionally, decisions regarding fulfillment should include the fact that ground services are newly and nearly always one to two days from either coast to customer except to the other, or to sparsely populated areas. There, price can factor insomuch as to offer complimentary one or two day service (not necessarily handling or ground service cost). However, again, if you have fewer SKU’s and relatively high volume, two locations are worth investigation. There are no magic formulas, but there are those fulfillment houses who work together as a result of the geographic, zone based logistic. Or, a client can choose two or three fulfillment houses in this scenario. And a simple national division is made based on location zip codes and some math to determine from where shipments are made.

Karol works with clients who have multiple fulfillment vendors for regional considerations (closer to manufactures as well as shipment destinations) and those who need inventories in one place without high customer demands for quick delivery. It depends. But for sure, population density relative to product is to be looked at closely too. And if you’re selling high mountain supplies and equipment, you probably know your shipping location needs to be in high mountain areas or surrounds—not Surf City NJ.