Starting an e-commerce business is easy these days. However, competition is stiff, especially for new brands that are just setting up shop. The biggest challenge stems from order delivery and handling customer returns.
Here is where you need to partner with an e-commerce distribution center. In most cases, the e-commerce center will play a critical role by receiving products, storing inventory, processing orders, and ensuring goods reach customers.
In this guide, we explore the most important factors to consider when looking for an e-commerce distribution center for your store.
What to Consider When Looking for an E-Commerce Distribution Center for Your Business
Strategic Location and Proximity to Customers
To compete with established brands, you need timely delivery. In fact, you should be able to offer next-day delivery whenever possible.
An e-commerce distribution center that is strategically located allows your business to reach customers faster. Moreover, it minimizes the distance products travel between storage and delivery destinations.
Before selecting a facility, analyze where most of your customers are located. If your business serves customers across several cities or states, consider a distribution center that provides convenient access to your major markets.
Storage Capacity and Inventory Management
A proper e-commerce distribution center must have sufficient storage capacity to hold your current inventory. Furthermore, it should also be able to scale based on your business demands or growing customer base.
Besides storage capacity, the distribution center should also support organized inventory management. Without a proper inventory management system, products can become difficult to locate, orders may be delayed, and inventory discrepancies can increase.
Poor inventory accuracy can lead to canceled orders, dissatisfied customers, and unnecessary replacement shipments. Limited space, on the other hand, means you will be back in the market the moment your inventory grows.
Order Fulfillment Capabilities of an E-Commerce Distribution Center
Order fulfillment is one of the main services offered by e-commerce distribution providers such as Packageman.
The e-commerce distribution center must be capable of handling everything, from receiving an order to handing the shipment to a last-mile carrier. These activities typically include order processing, picking, packing, labeling, staging, and dispatch.
When comparing e-commerce distribution centers, examine how efficiently they manage the order fulfillment process.
Technology and Warehouse Management Systems
Modern e-commerce is powered by smart warehouse management systems. The days of managing stock using pen and paper are gone. The ideal warehouse management system will automate repetitive tasks, reduce human error, and allow you to monitor order fulfillment from a centralized platform.
Importantly, the systems should also be compatible with or integrate well with what you already have in place. For instance, you will have no issues managing multiple stores if the warehouse management system works well with your current e-commerce selling platforms.
With this integration, whenever a customer places an order, the system will automatically send the order to the distribution center, reserve the relevant stock, and send back tracking information after dispatch.
Total Operating Costs and Pricing Transparency
One of the main reasons online business owners use e-commerce distribution centers is to reduce operational costs.
However, this doesn’t mean going for the cheapest option in the market. Instead of comparing only the advertised fee, calculate the total cost of operating through each facility. If you can, request that the 3PL firm behind the center send you an itemized price quote.