A multi-warehouse strategy is only efficient and useful for certain D2C brands. However, there are specific instances where D2C brands can adopt this strategy.
For example, you can adopt a multi-warehouse strategy if your customer base is located in different regions or worldwide. This helps you reduce delivery time and associated costs.
In this guide, we will explain the how multi-warehouse strategy works and the examples where it is efficient to utilize it in depth.
What Is A Multi-Warehouse Strategy?
A multi-warehouse strategy is distributing products across numerous warehouses. In this technique, you do not store all products in one location. Warehouses can be located at different locations, and the goods are stored there instead of being distributed from one place.
This strategy is suitable if executed for D2C brands which has a wide spread customer base. Since D2C brands ship products directly to customers without mediators, this is one of the efficient strategies. Also, it helps with sending goods quickly and at a lower price to customers.
When Should You Use A Multi-Warehouse Strategy For D2C Brands?
Since a multi-warehouse strategy is one of the effective practices for D2C brands, there are specific instances where a brand can adopt this strategy. However, it may only be suitable for some D2C brands.
Therefore, let’s understand when to use the multi-warehouse strategy in D2C brands.
1. Do You Have A Nationwide Or Global Target Audience?
You can adopt a multi-warehouse strategy if your customers or the target audience are dispersed across the country or internationally. By doing so, you can gain benefits as you have a nationwide or global audience, as discussed below:
- Helps to reduce the delivery times by delivering goods from the nearest store.
- Shipping from one warehouse to customers who are far away may lead to extended delivery times and intermediaries.
- Having several warehouses helps reduce shipping costs.
- Ability to minimize potential order delays.
- Opportunity to provide more affordable shipping options.
2. Do You Have A High Order Volume?
If you are a new D2C brand, you may have less order volume in overall and may expand with time. However, when your D2C brand grows, your order volume increases. Therefore, it may be difficult to send products from one warehouse.
Also, if you have order volumes, you may need to fulfill infrastructure facilities, leading to high error rates. You may also need more processing time to avoid logistical bottlenecks.
Therefore, having multiple warehouses spread out according to your customer base helps you increase efficiency and order delivery time.
3. Do You Want To Reduce Shipping Costs?
If you handle goods from one warehouse across many regions, depending on the area, you may want to incur a higher shipping cost.
Therefore, if you have warehouses closer to customer demographics, you can ship products from the nearest store. This can reduce long-distance shipping charges and optimize your costing strategies.
Moreover, strategically located warehouses in several locations help control regional shipping rates and reduce transportation expenses.
4. Do You Want To Provide Faster Deliveries?
According to Ware2Go, more than 42% of buyers anticipate to expect their products to arrive within two days. However, if you have products that demand faster deliveries, you can adapt a multi-warehouse technique. This helps you reduce the delivery time.
Moreover, when you provide faster deliveries, you exceed customer expectations and even gain a competitive advantage. Therefore, a multi-warehouse strategy comes in handy to increase customer satisfaction and repeat purchases in the long term.
5. Is It Challenging To Manage Seasonal Or Regional Demand Fluctuations?
In some D2C brands, there can be seasonal or regional demands. For example, certain products can be more prevalent in specific regions or seasons. Therefore, you need to manage your business and the inventory levels accordingly.
However, if you have multiple warehouses, you can distribute specific high-demand inventory to particular warehouses. This helps you stock up on time, maintain strategic locations, and avoid order delays.
6. Do You Want To Tackle Business Risks Effectively?
Handling situations such as natural disasters, labor strikes, or logistical failures may be difficult if you have only one warehouse. However, if you have multiple warehouses, you can distribute the products as per the requirement and handle this situation effectively.
Another example is if one warehouse faces a disruption, the other warehouses can complete the orders. Therefore, it helps to exceed customer expectations and avoid further disappointments.
How to Implement a Multi-Warehouse Strategy
If you face any of the above situations, you can implement a multi-warehouse strategy. However, it requires careful planning and execution.
Here are the critical steps you can follow accordingly to adapt to a multi-warehouse strategy:
- First, analyze your customer base and determine the locations where they are situated. This will help you identify the strategic warehouse locations.
- Next, you must choose the proper third-party logistics (3PL) providers to help you provide their multi-warehouse solutions.
- Next, you need to optimize your inventory management by identifying the order quantities you will distribute to each warehouse and tracking stock levels, order fulfillment, and shipping.
- Ensure your multi-warehouse strategy helps to handle your shipping and returns processes effectively.
- Finally, you need to monitor your multi-warehouse strategy to optimize it further. For example, you need to keep track of critical metrics such as shipping times, fulfillment accuracy, and customer satisfaction.
Final Thoughts
In conclusion, the multi-warehouse strategy is one of the most efficient strategies that D2C brands can adopt. It helps reduce delivery costs and times and increase customer satisfaction and profits. However, depending on the scope of your business, this strategy comes in handy in specific instances, as discussed above.
Moreover, if you need help finding the ideal 3PL provider to adopt the multi-warehouse strategy, we can help you. Contact 3PeeL to assist you with 3PL matchmaking to find the perfect fit based on your unique requirements.
