Speed and accuracy of order fulfillment is an important differentiator in e-commerce. In this post, we want to focus on a common question: when a seller stocks inventory in multiple locations, how does one decide which to use to fulfill an order? To answer this question, we called on the wisdom of Jason Goldberg, who co-hosts the Jason and Scot Show podcast with our founder, Scot Wingo.
Many online retailers keep inventory in multiple locations. Some stock in multiple warehouses; others have a combination of retail stores and warehouses. Sometimes, identifying from which location a specific order should be fulfilled requires taking different factors into consideration. While there is not a perfect answer to every fulfillment situation, Jason outlined the top three things to consider:
- Cost to fulfill — Optimize for the lowest cost to fulfill.
- Customer experience — Weigh the two big factors: a) speed to get the item(s) to the customer and b) ability for multi-item orders to ship together.
- Inventory potential —This is a bit more complicated because it is based on projecting information about the next order for an item as part of the decision-making process for how to ship this item. Essentially, it requires an algorithm that includes data about past shipments to decide how to best ship this item so that inventory across all fulfillment vehicles remains in such a state that the seller can come as close as possible to meeting the customer experience and fulfillment cost goals for the next order for that item.
Jason and Scot focused on this topic during one of their recent podcasts. Click here to listen to the full episode.
Figuring out the best way to fulfill has become quite tricky. Luckily, the following tools in the ChannelAdvisor platform can help in the decision-making process:
- Inventory Velocity Report — This report provides information on the recent sales of each SKU as well as an estimate of how long the existing quantity will last. The report can be run with the inclusion of the distribution center (DC) so you can view the inventory velocity for your products held at your DCs. This report is useful for identifying those SKUs which are fast moving and at risk of selling out quickly to enable logical decisions about how to stock each DC.
- Handling Time by Distribution Center and Site — These widgets provide analysis of the time between when an order was created and when the order was marked as shipped, broken down by distribution center and site. These widgets allow sellers to monitor either partner performance or their own warehouse performance, as well as keep in line with marketplace seller metrics.
- Proximity Order Routing — By enabling this feature for US accounts, the ChannelAdvisor system will try to find which DC is closest to the buyer and assign the order to that DC. It also strives to ship multi-item orders together.
- Fulfillment by Amazon (FBA) Dashboard — The FBA Dashboard provides a high-level view of the most important aspects of your FBA business with options to dig deeper into the details. The dashboard makes it easy to view the performance of your FBA products, understand where your inventory is located within Amazon and get insights into the next steps you should take with your FBA listings.
In conclusion, while the answer to this question is ever changing and can be different for every business, ChannelAdvisor can provide meaningful data to help. The FBA Dashboard provides help with cost to fulfill; Proximity Order Routing and Handling Time by DC and Site ensure you not only meet but exceed your customers’ fulfillment expectations; Inventory Velocity report helps assess and address Inventory potential along with the other three features as well.