National Fulfillment Services

When should a merchant upgrade to a national fulfillment solution?

Retailers that start out on Amazon usually have a ready-made option for national fulfillment in Fulfillment By Amazon (FBA). Amazon has famously built its fulfillment network to massive proportions, and they have the most eCommerce fulfillment locations across the United States. For all other orders, though, they’re likely shipping out of either their own small warehouse, a small single 3PL, or even their garage. Small, single operations like these don’t have the scale to match larger networks for efficiency. You might be surprised, though, by how easy it is to gain value from a nationwide network – and how soon you can do it.

At just a few hundred orders per month, a merchant reaches the point at which he or she has enough scale to distribute inventory to multiple locations across the country. The benefits of national fulfillment will far outweigh the small increase in inventory needed to supply multiple locations. 

The one caveat to this guidance is that if a merchant has very high SKU diversity, they’ll benefit most from outsourcing their high volume SKUs only. Low volume, “long tail” SKUs benefit much less from distributed fulfillment.

So – what are those benefits of national fulfillment?

Benefits of using national fulfillment services

National fulfillment services are vital for ecommerce merchants that want to boost revenue growth and protect margins. Here are the 3 benefits of using national fulfillment services.

1. Nationwide fulfillment boosts revenue growth

“Fast and free” shipping badges are one of the single most effective growth tools in the eCommerce industry. Amazon calculated that adding a Prime badge to a product improves results by 50%, and Walmart similarly found that their TwoDay badge drives a 40% lift. Every major marketplace and shopping cart now has their own version of the Prime badge, and each finds a big revenue boost from using the badge.

If you’re shipping out of one or two locations, you of course can qualify for fast and free shipping badges simply by paying express carrier rates – but what’s the point of revenue growth if your shipping costs more than the product itself? Nationwide fulfillment networks unlock profitable revenue growth through fast shipping by placing inventory across the country. Every order will be fulfilled by a near-by location, so the cheap shipping options still deliver within 1 or 2 days. You’ll be able to turn on those badges across all channels and reap the rewards of better search rankings and higher conversion.

2. Minimize shipping costs

Merchants shipping from just one or two locations will often see half or more of their orders shipping to Zone 5 and up. Compared to shipping out of a single location, national fulfillment distributes inventory more efficiently across the country – so orders are shipped from a starting point much closer to their destination.

Placing inventory in 3-5 locations all but eliminates the need to ship above Zone 4, cutting a merchant’s average zone profile by multiple zones. Every one of those shipping dollars saved goes straight to the bottom line – and typically, saving a few zones on every order means saving a few dollars. What would you do with $2 more profit on every order?

3. Reduce supply chain risk

Capacity is strained at every point of the supply chain, from international shipping to last mile delivery. Capacity isn’t crunched equally across the country, though, which means that a nationwide network can significantly reduce the risk that all of your inventory will be stuck in the same massive delay – like the massive shipping back-up in Southern California

For example, if there’s a warehouse strike in the Southeast, you will still have inventory placed in 3-4 other regions. With one or two small warehouses that might not be an option – meaning your entire inventory could be stuck for weeks.

The snap freeze in Texas in early 2021 trapped inventory for weeks – and many merchants had to stop selling because they had no way to fulfill orders. If they had a nationwide network, they would have kept on selling even as one part of the country shut down.