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How to choose a fulfillment center location

When searching for a fulfillment warehouse, most online retailers go for a logistics center that is located near them. That is why a search query - fulfillment center near me - is one of the most common ones on the internet when talking about fulfillment warehouse location. In most cases, however, this is not the right strategy for choosing your logistics center. To reduce costs and increase efficiency, it's better to distribute your goods across multiple fulfillment warehouses near your main customer base.

In this article we are going to explain what effect a geographical position of a warehouse can have on your sales and how to wisely choose a fulfillment center location for your enterprise.

1. Does my fulfillment center have to be near me?

The short answer is no. Your warehouse doesn't have to be close to you. Although it can be reasonable if the larger part of your buyers reside in the same area as your business headquarters. But since it is often not the case, a fulfillment center location should be nearby the main clients base. That way the orders will travel through less shipping zones, which will result in quicker delivery in addition to lower shipping fees.

Sure, it may feel risky not having your fulfillment center in close proximity, and it may feel like less control. But thanks to modern technology, most 3pls are now competent enough to give you a complete overview of the entire fulfillment process in real time.

Another consideration is whether a fulfillment center should be located near your manufacturing facility. Although it may be cheaper to transport your goods from the manufacturer to the warehouse if it is located nearby, you should not make your decision based on this. Proximity to the target market is also an extremely important factor here.

2. When is it better to use multiple fulfillment centers?

A single warehouse is a good option for a beginner with a rather small number of orders per month and a main customer base in a certain region.

But as your business grows and your reach expands, you'll attract more and more customers from far-flung regions. Shipping to these customers across many shipping zones is expensive and ineffective. In this case, it's very useful to use multiple strategically located warehouses.

You can easily distribute your inventory among these warehouses. When an order is received, the item is shipped from the warehouse closest to the buyer. This results in fast delivery and satisfied customers. Also, packages go through fewer shipping zones this way, so shipping costs are much lower. So you can offer free delivery, which makes your customers even more satisfied.

This approach is called distributed inventory. The key is to constantly analyze your sales data. This helps to understand which