Today, many e-commerce customers expect free or reduced shipping costs and super fast delivery. Storing inventory in multiple locations around certain geographical areas (like Australia) will give your e-commerce store a competitive advantage against those who are based out of one shipping location. These are three benefits to having inventory stock in multiple locations.
1. Faster Shipping
Location Location Location
Often a saying used more often in real estate but the location of your inventory matters in e-commerce. One of the biggest benefits of having your inventory located in multiple locations is faster shipping times. Items can be shipped from a location closest to your customer which results in shorter transit times. This ultimately leads to faster delivery to the customer’s doorstep. This benefits e-commerce businesses who are looking to expand from the west coast of Australia to the east coast or vice versa. As delivery times will be reduced significantly.
Untangling Those Customer Knots
Chances are your most loyal customers are in similar locations. These are called “customer knots.” Locating your product as close as possible to these “knots” where a number of repeat purchase customers are located will keep those customers happy with faster shipping times and not to mention shipping will be much cheaper. Which leads to…
2. Cheaper Shipping Rates
When shipping from one centralised warehouse location, it can take a long time for your product to reach your farthest customers. This means higher shipping rates.
By having your inventory stocked at multiple locations transit times between locations is heavily reduced. You can also cut out entire delivery zones using this method. For example, if you have one inventory location in Perth, and your customer is in Sydney. The product would have crossed the entire country and multiple delivery zones before it would reach the end customer. By having the product located in Melbourne the product would have a much shorter journey cutting out most of the 4000km journey between warehouses. Resulting in much cheaper shipping rates.
3. Risk Minimisation
There are many natural catastrophes and occurrences that can occur in nature that can prevent goods from being shipped from a particular location. Although rare in some parts of the country, severe storms, cyclones, earthquakes and bushfires all have a potential impact on your e-commerce orders. By splitting your inventory across multiple locations, you will have back up stock in another location which you can dispatch from an area unaffected from the natural disaster.
Unexpected Rises in Volume
As discussed earlier customers tend to hang around in clusters. As your e-commerce business expands from local to national customer clusters will begin to appear in many different locations. While this is great for your business, this leaves you with a potential logistical issue.
How to best serve these geographically diverse customer clusters? What happens when volume rise unexpectedly in one location compared to another?
By spreading your inventory over multiple locations, it seems as if you actually have multiple inventories, this serves as a sort of back-up system for when one location runs out of a particular product that you need to ship. This gives your business flexibility and a logistical advantage to ship out goods when unexpected events occur.
To conclude, tactically storing inventory in multiple locations gives you a competitive advantage over other e-commerce businesses and a logistical advantage in the event you want to scale your business and expand your market reach.
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