Location is everything! If you’re somewhat familiar with real estate, you’ve likely heard that phrase at one point or another. In shipping and fulfillment, location is everything too – and when your products are closer to customers, that means they get them faster.
When you’re shipping to big cities, you want those items close to those locations.
If you’re at the point where you can no longer fulfill orders on your own, and you don’t want to run warehousing operations yourself, you can outsource fulfillment to a third-party logistics (3PL) provider. By doing so, it’s going to open up your shipping options like never before, not to mention all the other benefits that come along with it.
If you go back 10+ years ago, having orders fulfilled in rural areas could work. That’s not the case today – shipping from a rural location today is going to slow your shipping speed and it’s likely costing you more money. 2021 – consumers want their products fast. Many big cities are still seeing substantial growth in their populations, this is why we’re seeing urban fulfillment centers on the rise.
Today, you’re going to learn why fulfilling orders in metro areas may be the right investment for your ecommerce logistics strategy.
Why Are Urban Fulfillment Centers Important?
With a fulfillment center in a large city, you are closer to larger pockets of the general population, as compared to being in a more remote area. While rent is certainly more expensive in major cities, the tradeoff of not being in the middle of nowhere is that you are close to the majority of the buying power in the US. That’s where your potential ecommerce customers live.
If we look at the chart below, we see the population of the largest metropolitan areas in the US from 2016. A fulfillment center in any of the top cities listed below would be positioned to reach a good amount of people.
Faster Delivery When You’re Closer To Customers
When you’re targeting specific fulfillment cities in specific cities, the reason you do is so you can quickly reach the people who live there. When your closer to the customers you’ll be shipping orders out to, those customers are going to receive their orders faster.
If your urban fulfillment center is strategically placed around shipping zones, those packages can be shipped immediately and customers can get their orders within 1-2 days. If your 1,000+ miles away, those orders are going to naturally take longer to reach customers.
We live in a time where consumers are expecting orders to be delivered fast. Working with a 3PL fulfillment company that offers fast deliveries can greatly improve conversions on your website and reduce shopping cart abandonment.
What about when you have to ship orders further? Another benefit to urban fulfillment centers is the fact that nearly every major city has airports. When you need to distribute product elsewhere, those large airports help you efficiently distribute orders.
More Fulfillment Centers Can Lower Your Shipping Costs
We’ve discussed that shipping your items from a single ecommerce fulfillment center in a major city can greatly benefit the customers who live near there. That’s great for that location, but what about your customers that live on the other side of the country? You don’t want them to wait longer or pay for expedited shipping via air, right?
The best solution – you want to have multiple fulfillment centers in major cities. How do you think Amazon is able to offer Prime? They have multiple fulfillment centers in major cities across the country.
Not only can you speed up your delivery times, you can also reduce your shipping and logistics costs. This is based on how shipping zones work, referring to the geographical areas the major carriers ship too, there’s a total of 8 shipping zones (zone 1 through zone 8) here in the United States.
Here’s how those shipping zones work. The location from which an order is shipped is known as the “point of origin,” it would be located in Zone 1.
The address it’s shipped to is the destination zone. The destination zone number will vary, depending on how far it is from the point of origin, with Zone 8 being the farthest away. The further the shipping zone is away, the longer it takes to reach them.
The Road Ahead For Urban Fulfillment Centers
It’s important for retailers to strategize and think ahead. While it’s important to think about the next quarter, you have to be able to strategize long-term. In a relatively short space of time, consumer delivery expectations have gone through the roof. Amazon Prime, do I need to say more? What are ecommerce merchants doing to get their products to customers faster?
In order for retailers to compete in urban markets such as Reno in Nevada, retailers need to be close to their customers. At the very least, you should be closer to the majority of your customer base. There’s a lot of benefits to that and with delivery expectations continuing to rise, having an ability to get orders to customers faster can be a huge win for your growing company.
As you decide on the right strategy, you should consider urban fulfillment from a total cost perspective. While it may appear expensive to get started with a distribution center in an urban area, providing quicker deliveries from a regional or national hub located hundreds of miles away isn’t likely sustainable. However, in the long game, the total cost to deliver products to your customers can be lower with a fulfillment center in an urban market.
The value of a local urban fulfillment center goes way beyond improving customer service. Think about this for a moment. At the moment, out-of-stock inventory leads to retailers losing more than $144 billion annually. Say it one more time – out-of-stock inventory is costing retailers $144B per year.
The last thing you want to do is get left behind – you can’t play that game with competitors. Retailers need to adapt and keep pace with industry leaders like Amazon. Sure, do your own due diligence like you are now. Take the time to evaluate how a fulfillment center and retail urban supply chain can enhance your customer experience. There’s a lot of pros for using fulfillment centers, see if they match your vision for the future and if they can help get your company to where you want it to be.
In Closing
Selling products online lets you reach customers all over the world at all times of the day. Though you can work from anywhere when you run an ecommerce store, your fulfillment centers should be located where you can most efficiently ship to the greatest number of customers. This is exactly why we’ve placed our fulfillment centers in strategic cities across the United States. To maximize your opportunity and benefits, you will want to use multiple fulfillment centers in highly populated areas.
If you’re looking for a 3PL with fulfillment centers in big cities across the US, Thill Inc. owns and operates facilities across the country. You can utilize our strategic geographic footprint and split your inventory across the country to reduce your transit times and shipping costs. This includes seamless communication across fulfillment centers and the ability to automate alerts to let you know when it’s time to replenish inventory for each SKU at each facility.
To learn more, contact our fulfillment experts today at 1-920-967-9201 or you can use this contact form.
