Have you ever been shopping online and found the perfect item, only to be discouraged by high shipping costs or slow delivery times? We’ve all been there. When it comes to ecommerce, how you distribute your physical inventory geographically is key to offering cost-effective and fast shipping options. In this blog post, we’ll explore how physical distribution impacts shipping and delivery times for ecommerce brands.
What exactly is Physical Distribution?
Physical distribution is a vital part of any ecommerce business. It refers to the movement of finished goods from a company’s distribution and fulfillment network to the end user. In many cases, physical distribution of goods consists of multiple fulfillment centers within a single distribution network to reduce shipping costs and speed up transit times for customer orders. This can be done by what is referred to as a 3PL or a third-party logistic center which is outsourced logistics, or a 2PL where the brand handles the shipping and logistics of their own goods to the end customer.
Physical distribution is a complex process that requires careful planning and coordination. As such, it’s important to have a CEO, COO, and CFO who are all experienced leaders in the field of ecommerce. With their expertise, they can ensure that your company’s physical distribution process runs smoothly and efficiently.
Why this is important to brands
As an ecommerce CEO, you’re always looking for new ways to increase efficiency and reduce costs. And one area that can have a big impact on your bottom line is physical distribution.
Physical distribution is the process of getting goods from your suppliers to your customers. And it’s important because it’s linked to three critical business objectives: faster shipping, reduced logistics costs, and high customer satisfaction.
Here’s a closer look at how physical distribution contributes to supply chain efficiency:
Faster Shipping: Physical distribution helps you get goods to your customers faster. By reducing the time it takes to receive and ship orders, you can get your products to your customers sooner. This is especially important if you sell time-sensitive items like food or electronics.
Reduced Logistics Costs: Physical distribution also helps you reduce logistics costs. By streamlining your supply chain and increasing efficiency, you can minimize the cost of shipping and handling. This savings can add up quickly, especially if you ship large orders or orders frequently.
High Customer Satisfaction: Physical distribution can also lead to higher customer satisfaction. By getting goods to your customers faster and reducing damage during shipping, you can keep your customers happy and coming back for more.
All in all, physical distribution is a key part of ecommerce success. By understanding its importance and how it contributes to your bottom line, you can make sure your business is as efficient as possible.
How Physical Distribution Impacts Shipping Costs and Leadtime
The cost of shipping an item is directly impacted by its physical location. The further away an item is from its final destination, the more it will cost to ship. This is because carriers charge by weight and distance. So, if you have inventory spread out across multiple locations, it will likely cost more to ship than if you had centralized inventory in one location. The good news is that there are ways to minimize shipping costs, even if you have inventory in multiple locations. One way to do this is by using a fulfillment company that has strategically placed warehouses across the country. This helps to minimize transportation costs and get items closer to their final destination.
Another way to reduce shipping costs is by using technology like route optimization software. This type of software takes into account multiple factors—like carrier rates, fuel costs, and traffic conditions—to calculate the most efficient shipping routes. By using route optimization software, you can save money on transportation costs while still getting your items delivered quickly.
CEOs of ecommerce brands have a lot on their minds. They have to worry about everything from the product to the website to the warehouse to the shipping. And these days, customers expect faster and faster shipping times. Marketplaces like Amazon and Walmart are setting the bar high for fast inexpensive shipping.
To meet these expectations, ecommerce brands need to strategically store inventory across several locations. This way, they can reach different regions of the country faster. From there, you can reach other parts of the Midwest quickly. But if you only store your inventory in Los Angeles, it would take longer to ship to Chicago.
The bottom line is that fast shipping times are essential for keeping customers happy. We help ecommerce brands with this by helping them take back control of their business, shipping, and distribution.
The cost of distribution Don’t be fooled by all the hype of outsourcing. You have to consider both the benefits as well as the downside to handing over such a major component of your business, the distribution of your goods. Ecommerce platforms, if you’re looking to reduce physical distribution costs, there are a few things you can do. For example, you can distribute products in different US regions. By doing so, you can reduce the average shipping zone a package is sent to reach its destination. Additionally, you can use historical order data and other distribution metrics to determine where your customers live and if it makes sense to store inventory in one or multiple locations. By taking these steps, you’ll be on your way to reducing physical distribution costs and passing on the savings to your customers.
Sacrificing your CX?! Customer experience is everything. At its core, strategic physical distribution is about improving your bottom line while providing customers with a better experience. By optimizing shipping routes and storing inventory closer to your customers, you can save money while reducing time in transit. This ultimately leads to higher customer satisfaction and a better customer experience. Additionally, implementing a cost-effective physical distribution model can also allow for better shipping incentives, such as free shipping on orders over a certain amount or bundled deals. These offers not only offset costs, but they also further improve the customer experience. In today’s competitive landscape, customer experience is key. By leveraging strategic physical distribution, you can be a leader in providing an exceptional customer experience that sets you apart from the competition.
Physical distribution is a critical part of ecommerce success. How you distribute your inventory geographically can impact both shipping costs and delivery times. There are several steps you can take to minimize these impacts, including using a fulfillment company with strategically placed warehouses and investing in route optimization software. Taking these steps will help ensure that your customers receive their orders quickly and at a low cost.
If you want to take back control of your shipping and logistics but you’re not sure where to begin, set up a consultation with one of our experts today.
