Building a Strategy for National Fulfillment Services

If your company ships products nationally, you know the fulfillment environment has never been more demanding. Customers’ expectations for rapid delivery have risen to never-before-seen levels, and their impatience and frustration when you fall short of those expectations can send them looking at your competitors with fresh eyes. Those expectations heighten the need to have national fulfillment services that are both fast and efficient.

For many shippers, national fulfillment services no longer simply means providing delivery of orders throughout the country. It now means fulfilling orders at the same reliable speed no matter where in the US a customer is located. Figuring out how to provide that level of service means examining your processes and resources closely and considering opportunities to up your fulfillment game.

Here are key questions to ask when determining the distribution infrastructure required to provide national fulfillment services.

How much speed do you need?

The first question to consider is how important fulfillment delivery speed is to your brand’s online sales. Amazon has created a new normal of two-day, one-day and even same-day delivery. If buyers can get your product easily from other brands, then you need to at least meet their delivery time standards. That may require more than one warehouse across the country. If your brand is unique or carries some cachet with buyers, then delivery speed may be less of an imperative since they can’t get that anywhere else. A single-DC strategy could work.

Is the timing right for expansion?

When you expand to more than one fulfillment center, it adds complexity. For brands that are still gaining traction in the market, expanding too soon may not be wise. You need to learn some things about your business so that you begin to see patterns in your customers’ demand.

• Which regions of the country generate which kinds of orders?
• Which SKUs move the fastest?
• How do order volumes rise and fall throughout the year?

Once you have this solid foundation and your current operation starts straining at the seams, that’s a good time to consider geographic expansion.

Are you at risk with a single fulfillment center?

A recent ice storm in Dallas (I know, sounds like an oxymoron) made it dangerous for many workers to come into our warehouse there. It so happened that, on this day, two large customers had significant, planned volume spikes. Because we serve both customers from additional fulfillment centers, we were able to divert a large percentage of the orders to the other, fully operational facilities to get 100% of the orders out on time.

That’s just one example. Different weather events, fire, a COVID outbreak or other disruptions can bring fulfillment operations to a complete halt if you rely on one warehouse for nationwide fulfillment. Only you know the short-term and long-term implications for your business if you were unable to fulfill orders for a day or even a week.

Can you afford not to expand?

In theory, national fulfillment services are possible with a single facility. But unless you want to spend a fortune for expedited delivery, the customers who live farthest from that facility will wait longer to receive their goods. And that might be OK. But with one fulfillment center, you’ll be paying a lot more for parcel shipping. That’s not OK.

Parcel shipping is by far your biggest fulfillment expense. The cost of adding warehouses to your distribution network will increase for the facility, labor, inbound shipping and inventory. But those costs are typically outweighed by the parcel shipping cost reductions associated with putting product closer to customers. With parcel, it’s those high-zone moves that really take a bite out of your wallet.

When you’re ready to develop national fulfillment services

You’ll still see some eCommerce sellers trying to succeed at national fulfillment with a single-warehouse model. This practice still happens because several years ago, using a single, centralized warehouse was common for many eTailers, especially those managing less than 100,000 orders annually. And many of those retailers haven’t evolved with current market conditions. Back then, consumers expected to wait a few extra days for goods they purchased online to arrive from a far-off fulfillment house.

Then, Amazon started to change all that with its two-day shipping model. After that, big omnichannel giants like Walmart and Target changed to keep up with Amazon. Eventually, skyrocketing eCommerce demand during the COVID-19 pandemic put that outdated fulfillment network model to rest. Put simply, nobody wants to wait five days for toilet paper anymore (or hardly anything else they buy online, for that matter).

National eCommerce fulfillment is no longer just about shipping to every state. Instead, it’s about getting your products to every national destination intact and on time, within the same predictable shipping window. Your customers in Florida want their goods just as fast as those in Northern California, and providing that capability has become essential to the overall customer experience. If your national fulfillment services fail to meet and exceed those consumer expectations, you’ll eventually get pushed out of key markets by competitors who didn’t make the same mistakes.

So, how do you achieve this? First and foremost, you must remember that today’s consumers want the things they buy online shipped fast and for free. Here’s what businesses usually need to accommodate this expectation:

• A national warehouse footprint. As mentioned, using only one fulfillment center poses great risks. National fulfillment services must support modern eTailers by locating inventory close to customers. To reach the entire country in two days, spread inventory across multiple warehouses. How many warehouses do you need? Your exact balance depends on your products, customers, competitors’ capabilities, and more. However, the point here is that most mid-to-large eCommerce sellers today need to divide their inventory among multiple facilities to some degree just to stay competitive.
• Expertise and efficiency in each warehouse. Delivering faster than a competitor requires efficient processes from the moment of the order to when the package arrives on the customer’s front porch. That means a fulfillment center must have experienced warehouse associates and efficient fulfillment picking processes to keep inventory moving. It will also require automated or semi-automated technologies that shave critical minutes off picking, packing, and shipping activities.
• Partnerships with parcel carriers. An online seller must rely on national and regional parcel carriers to carry customer orders to their destinations. Therefore, good carrier relationships are fundamental to a solid national fulfillment services model. Most online sellers won’t have enough volume to get the best rates from carriers. That’s why many ship under the parcel contracts of their warehouse fulfillment partners because these partners negotiate rates based on their aggregate volume across all customers.
• Appropriate inventory management solutions. Getting the right inventory to the right warehouses can be very challenging. The more SKUs in a seller’s inventory, the more complex inventory management becomes. Spreading inventory accurately across a warehouse network requires advanced inventory management software to analyze your historical sales data and tell you what SKUs to locate in which place.

Establishing additional warehouses and onboarding new technologies can be challenging, intimidating, and prohibitively expensive on your own. Partnering with a fulfillment 3PL can help ease the transition to nationwide fulfillment services.

Can a national fulfillment 3PL help?

The added costs and complications of a multi-warehouse, eCommerce fulfillment networks are less of a burden if you work within a national fulfillment 3PL. A national 3PL could:

• Do an distribution network analysis analysis to help you decide the optimal number of warehouses you should have and where they should be
• Provide immediate distribution in new regions of the country using an in-place network of fulfillment centers
• Reduce your warehouse costs by allowing you to share overhead costs with other companies at a multi-client facility
• Reduce your parcel costs by shipping under their discounted parcel shipping rates
• Provide the ability to scale your fulfillment operations to support any rate of growth, including the addition of new facilities and the introduction of automation to efficiently manage high-volume fulfillment.
• Create customized national fulfillment services that meet your exact needs, allowing the fulfillment partner to act as an extension of your core operation.
• Accommodate multiple distribution needs, such as offering eCommerce fulfillment, distribution to your retail partners, marketing material distribution, and more from the same facilities.

Best of all, 3PLs that offer national fulfillment services give you the freedom to focus on growing your business while they serve as your growth guide, providing the fulfillment advice and infrastructure you need.

If you’re thinking about expanding your warehouse network to provide truly national fulfillment services, we’re happy to offer our perspective – and our services. Staci Americas' nationwide fulfillment network enables 1–2 day ground delivery to 95% of the US. Let’s talk.