Bicoastal Fulfillment Strategies
When you are first getting started, working with a single location fulfillment warehouse may be all you can handle. Putting systems in place to share data, tracking and maintaining inventory, and dealing with customer service issues can all be a big lift when you are new to ecommerce.
As your business grows, however, you may find that there are some big upsides to splitting your stock between two or more national fulfillment warehouses. Here are some points to consider as you develop your bicoastal fulfillment strategies.
Where Are Your Customers?
A bicoastal fulfillment strategy will largely depend on where your customers are. Let’s take a hypothetical example: Toni runs Tropical Treats Candy Company out of a commercial building in Miami, Florida. At first, Toni sells her chocolatey treats to local stores. Then she moves into ecommerce and begins to ship. She expects that most of her customers will be in Florida but good reviews quickly spread the word about her Macadamia Nut Surprise and Choco-Mango Madness. Before long, people across the United States are clamoring for her sweet treats.
Traffic on Toni’s site is up, but so is her shopping cart abandonment rate. She gets comments about her candy being “worth the wait.” Toni realizes that high shipping costs and long shipping times could be fatal to her growing ecommerce candy business. She needs a different way to get candy to her hungry fans.
Her employees have been shipping orders directly from her production facility, but they can’t handle the volume anymore. Toni realizes that a fulfillment warehouse in Miami won’t solve the obstacles that keep her customers from clicking the buy button. She needs to look for a centrally located 3PL company – one that has warehouses serving both coasts and the middle of the country.
Bicoastal Fulfillment Times
Shipping times of a week or more may be acceptable for boutique or niche ecommerce companies. If you’re selling on one of the big platforms such as Amazon or eBay or competing with those platforms, however, fast delivery is a must.
Ecommerce consumers treat online shopping not much differently than going to the store. They want to order one day and receive their order within a couple of days. This is particularly true for online businesses that sell everyday necessities – the kinds of goods shoppers once bought at grocery or general stores. Ecommerce is moving toward combining the convenience of click through shopping from anywhere with much of the immediacy of leaving the store with a bag under your arm. As Amazon moves into drone delivery and ever faster turnaround, the competition to get orders to consumers fast is growing.
At Red Stag Fulfillment, we established our first fulfillment warehouse outside of Knoxville, Tennessee. From there, we can ship our clients’ orders to almost every location east of the Rockies within two business days. We are opening our new warehouse in Salt Lake City, Utah. From that location, we can now reach almost all the rest of the continental United States within two days. With our fulfillment warehouse network, our clients can reach their customers at the speed of the ecommerce age.
When Charlie in Charleston needs to get a make-up gift to his long-distance sweetie in Seattle, he’s going to choose the candy company that can ship a big box of Cherry Chocolate Surprise the fastest. Now that Toni has bicoastal fulfillment, Manny is more likely to choose her Tropical Treats over her competitors. The west coast warehouse of her 3PL company can get it to Susan in Seattle the next day. Now everyone is happy.
Bicoastal Fulfillment Rates
Reasonable shipping charges won’t kill your sales, but shipping costs that add significantly to the cost of an order can end your chance at a sale. UPS and FedEx base their shipping rates on zone. The greater the distance between your fulfillment warehouse and your customer, the more zones you package will have to cross and the higher the shipping cost. When you use a 3PL company with bicoastal warehouses, your orders can ship from the location closest to the customer.
Yes, it may cost you extra to drop ship your inventory to two locations. But the cost per unit to ship pallets on a cross country truck is much less than the additional shipping cost per order when your fulfillment warehouse is far from your customers.
An industry term for this is zone skipping. When you place a bunch of orders in bulk on a truck, drive across several zones, then deliver to a shipper for regional or local delivery, that’s called zone skipping. When you use a bicoastal 3PL provider with fulfillment warehouses that serve the whole country, you are effectively zone skipping with your merchandise.
Bicoastal fulfillment strategies can also help you achieve the gold standard of ecommerce: free shipping. Free shipping is the best way to put a smile on your customer’s face and a click in their fingers. When you ship your orders from warehouses closer to the end consumer, you may save enough on shipping costs to offer free shipping on some or all of your items. Bicoastal fulfillment could move you into the ecommerce big leagues.
Managing Bicoastal Fulfillment Inventory
Bicoastal fulfillment strategies can give your ecommerce business a big boost but there are things to watch out for as well. The biggest one is inventory management.
What if Toni’s Coconut Cacao Bites sell like crazy in California and her west coast fulfillment center runs out? Meanwhile, the chewy treats are sitting on the shelf in her east coast warehouse growing stale.
The answer to this dilemma is a thorough understanding of your business, including seasonality and patterns in sales across regions. A bicoastal fulfillment strategy is best pursued once your business has matured enough to chart buying patterns. This will help you distribute the right inventory to the right warehouse at the right times. A good 3PL provider can help you review your past sales to understand the best way to stock bicoastal fulfillment centers. At Red Stag, we work with every client to develop the fulfillment strategy that will best support their ecommerce business.
Of course, there will always be the unexpected. When Donnie in San Diego writes a funny Facebook post about his obsession with Toni’s Date Nut Delights and it goes viral, she might suddenly need to ship extra pallets of that candy from her east coast fulfilment center to her west coast fulfillment warehouse. But that’s a good problem to have.