These days fast, low-or-no cost ecommerce order delivery isn't just a shopping perk—it's a shopping expectation. Customers want their orders delivered quickly and cheaply. Your strategic challenge? How to deliver on their expectations without breaking the bank.
To meet these demands, many ecommerce businesses are turning to a multi-location fulfillment strategy, integrating multiple fulfillment centers including their own warehouses and distribution centers, marketplace fulfillment services like Amazon FBA, third-party logistics (3PL) providers, retail locations, and last-mile options like dark stores.
But while the benefits are clear—faster shipping times, lower costs, and happier customers—the challenges are significant. But mastering multi-location ecommerce fulfillment can be a powerful competitive advantage – lowering fulfillment costs, boosting margins and even providing sustainability benefits to organizations dedicated to lowering their carbon footprint.
The Challenges of Integrating Multiple Fulfillment Locations
Ecommerce businesses using several fulfillment locations, whether their own or through 3PL providers and other fulfillment partners, face unique challenges. These challenges can disrupt operations, drive up costs, and negatively impact customer satisfaction if not handled properly.
Inventory Visibility and Management
One of the biggest challenges is maintaining accurate, real-time inventory levels across multiple locations. Discrepancies can lead to overselling, stockouts or excessive inventory, all of which can harm customer satisfaction and increase operational costs. Without a unified view of inventory, businesses risk selling items they don't have in stock or holding onto too much inventory, tying up capital unnecessarily.
Complex Order Routing
Routing orders to the right fulfillment center is critical to minimizing shipping costs and delivery times. Without a centralized, automated system, this can quickly become a complex and error-prone task. Incorrect routing might lead to orders being shipped from a location far from the customer, resulting in longer delivery times and higher shipping costs.
Inconsistent Service Levels
Different fulfillment centers often operate at varying levels of efficiency. This inconsistency can lead to different delivery times and service quality, which can damage your brand's reputation and lead to a loss of customer loyalty. Consistency is key in building and maintaining trust with customers.
High Operational Costs
Operating multiple fulfillment centers independently can lead to redundancies and inefficiencies, driving up costs. Each location may require its own staff, technology, and inventory, which can result in higher overhead expenses. The lack of integration means missed opportunities for cost-saving synergies.
Integration of Third-Party Logistics (3PL) Providers
Integrating 3PL providers and other partners into your fulfillment network adds another layer of complexity. Ensuring that 3PL operations are seamlessly integrated with your own fulfillment centers is crucial for maintaining consistency in service levels, inventory management and order routing. However, 3PLs often use their own order, inventory and warehouse management systems, which can lead to complicate integration and communication issues.
Bringing together the different systems used by various fulfillment centers into a unified platform is complex and costly. Without seamless integration, data can become siloed, leading to inefficiencies and errors that can hurt your bottom line.
Strategies for Real-Time Inventory Management Across Locations
To overcome these challenges, ecommerce businesses need to adopt strategies that ensure accurate, real-time inventory management across all fulfillment locations.
Here are some key tactics:
Centralized Inventory Management System
A centralized inventory management system is the cornerstone of successful multi-location fulfillment. This system provides a real-time view of inventory levels across all locations, including those managed by 3PLs, allowing for more accurate forecasting and replenishment. By having a single source of truth, businesses can reduce the risk of stockouts or overstocks, ensuring that inventory data is consistent and up to date.
Predictive Analytics
Predictive analytics can be a powerful tool for optimizing inventory levels across multiple locations. By analyzing historical sales data, customer behavior, and market trends, predictive analytics tools can help forecast demand and suggest optimal inventory levels for each fulfillment center. This reduces the risk of stockouts and excess inventory, enabling businesses to maintain a lean, efficient operation.
Automated Replenishment
Automated replenishment ensures that stock levels are maintained optimally across all fulfillment centers and 3PLs. By analyzing sales trends and lead times, automated systems can trigger restocking orders when inventory falls below a predefined threshold. This prevents delays and ensures that the closest fulfillment center always has the necessary stock, reducing the need for manual intervention.
Distributed Order Management
A Distributed Order Management (DOM) system is essential for managing orders across multiple fulfillment locations, including those managed by 3PLs. DOM systems dynamically route orders to the most appropriate fulfillment center based on various criteria, such as inventory availability, location proximity and shipping costs. This approach ensures that orders are fulfilled quickly and cost-effectively.
Let’s take a closer look at DOM and the role it can play optimizing fulfillment across multiple locations and partners.
Etail customers implementing Distributed Order Management cut fulfillment costs by 20-40% in shipping costs alone
The Role of Distributed Order Management Systems in Optimizing Fulfillment
DOM systems play a critical role in optimizing ecommerce fulfillment across multiple locations. Here's how they can help:
Dynamic Order Routing
DOM systems excel at dynamic order routing. By analyzing data in real-time, they can determine the best fulfillment location to dispatch an order, minimizing shipping distances and costs. This leads to faster deliveries and higher profit margins, directly impacting customer satisfaction and your bottom line.
Load Balancing Across Fulfillment Centers
Another key function of DOM systems is load balancing. By evenly distributing orders across multiple fulfillment centers, DOM systems help prevent any single location from becoming a bottleneck. This ensures high levels of efficiency and reduces the risk of delays, maintaining consistent service levels.
Handling Complex Orders
For businesses dealing with complex orders—such as those requiring multiple items from different locations—a DOM system can seamlessly coordinate the fulfillment process. The system can split orders across multiple fulfillment centers, ensuring that each item is dispatched from the location that offers the best combination of speed and cost.
Carrier Selection Optimization
Carrier selection is crucial for managing both cost and delivery speed. A sophisticated DOM system can analyze carrier performance data to choose the best carrier for each order based on factors such as cost, reliability and speed. This optimization includes carriers used by 3PLs, ensuring consistency across the entire network.
Seamless Integration of 3PLs
Integrating 3PL providers into your DOM system ensures that their operations align with your fulfillment strategy. The DOM system can treat 3PL warehouses as additional nodes in your network, routing orders to them based on the same criteria used for your own fulfillment centers. This integration helps maintain consistency in inventory management, order processing, and customer service.
Real-Time Inventory Visibility
DOM systems provide real-time visibility into inventory levels across all fulfillment centers, including 3PL locations. This visibility enables better decision-making when it comes to order routing and inventory management, helping to prevent stockouts and ensuring that orders are fulfilled quickly and accurately.
Increased Flexibility and Scalability
As your business grows, a DOM system can scale with you, allowing you to add new fulfillment centers or integrate additional 3PL providers without disrupting your operations. This flexibility ensures that your fulfillment network can expand in line with your business needs, making it easier to manage growth and respond to changing market conditions.
A word of caution: many DOM platforms only work within their proprietary set of order, inventory and warehouse management tools. Etail, however, is “system agnostic” – it works with the systems you or your partners already have in place. That means a much lower investment, a much faster ramp-up, and no risky need to “rip and replace” systems you are already depending on.
Benefits of Distributed Fulfillment
When businesses successfully integrate multiple fulfillment locations into a centralized, well-coordinated system, the benefits are significant:
Cost Reduction
Optimizing order routing and inventory management across both in-house locations and 3PLs can significantly reduce shipping and operational costs. By minimizing inefficiencies and redundancies, businesses can lower their overhead and improve profit margins.
At Etail, we’ve seen some customers cut fulfillment costs by 20-40% in shipping costs alone.
Improved Delivery Speed
Faster delivery times are a direct result of efficient fulfillment operations. By integrating 3PLs and other distributed fulfillment locations into your fulfillment strategy and optimizing your network, you can maintain speed even as you scale. This leads to higher customer satisfaction and repeat business.
Scalability
A well-integrated fulfillment network can easily scale to accommodate growth, whether through new locations or increased order volumes. Adding 3PLs, for example, provides the flexibility needed to expand quickly without significant upfront investments, allowing you to meet rising demand without overextending your resources.
Flexibility
Integrated systems provide the flexibility to quickly adapt to changing market conditions, such as shifts in demand or disruptions in supply chains. You can quickly pivot to new strategies as needed, ensuring that your business remains agile and responsive.
An Etail customer using DOM cut their carbon footprint by 35% -and saved $5.7M
Sustainability
Distributing inventory to be closer to the customer not only cuts delivery time and expense, it reduces the distance products are shipped. That can help boost your efforts toward sustainability.
A study of one Etail customer using optimal ecommerce inventory placement showed that they reduced their carbon footprint by 35% and saved $5.7 million in shipping – enhancing ecommerce sustainability and their bottom line.
How Etail Can Help
Etail Solutions stands out as a powerful partner for ecommerce businesses grappling with the complexities of multi-location fulfillment.
Etail seamlessly integrates sales channels, suppliers, and fulfillment centers—including 3PLs—into a single, unified system. This integration allows businesses to maintain real-time inventory visibility across all locations, ensuring that orders are routed to the most appropriate fulfillment center based on factors like proximity, inventory availability and shipping costs.
As a pioneer in Distributed Order Management systems, Etail’s DOM platform excels in managing dynamic order routing, load balancing and carrier selection, optimizing every aspect of the fulfillment process to reduce costs and improve delivery speeds.
By leveraging predictive analytics and automated replenishment, Etail helps businesses maintain optimal stock levels, preventing costly stockouts or excess inventory.
The platform’s ability to scale alongside your business growth ensures that as your fulfillment network expands, your operations remain efficient and responsive.
Streamlining Distributed Fulfillment
Integrating multiple fulfillment locations into a centralized, well-coordinated system is no longer optional—it's essential for any ecommerce business looking to compete in today's ecommerce environment. By leveraging centralized inventory management, distributed order management systems, and sophisticated order routing strategies, companies can significantly reduce costs and enhance delivery speeds.
The challenges are real, but so are the rewards. Viewing fulfillment location integration not just as a logistical challenge but as a strategic opportunity can help build a more agile, responsive, and customer-focused business. Investing in these systems is a smart move for any organization looking to stay ahead of the curve in ecommerce fulfillment.
Additional resources
ETAIL PLATFORM OVERVIEWS
Network Inventory Optimization
WHITE PAPERS
Mastering Ecommerce Integration: Building Legacy Systems & Cutting Edge Solutions
Shipping Cost Reduction: The Biggest Ecommerce Profit Driver That You’re Probably Ignoring
Distributed Order Management Solutions Overview
BLOG POSTS
Choosing the Best Distributed Order Management System
Best Practices in Distributed Order Management
Maximizing Customer Satisfaction with Distributed Order Management
VIDEOS
Distributed Logistics for Digital Commerce, Part 1: A Change in Paradigm and Why it Matters
