All You Need To Know About Ecommerce Distribution Center

In the competitive e-commerce landscape, strategic distribution can make or break a business. E-commerce distribution centers are the backbone of a successful e-commerce operation, enabling businesses to efficiently manage inventory, process orders, and deliver products to customers across the globe. This blog will provide a detailed overview of an e commerce distribution center, exploring its significance in achieving business objectives and maximizing profitability.

1. What Is An E Commerce Distribution Center?

What is an ecommerce fulfillment center or distribution center? An ecommerce order fulfillment center plays a crucial role in ensuring fast delivery to your customers. If your order volume is substantial and your team isn’t large enough, fulfilling these orders on your own can become impractical - this is when relying on an e commerce distribution center becomes necessary.

These centers are specifically designed to allow e-commerce stores to outsource their storage and delivery needs. They often store products from numerous retailers and handle orders for various goods. Once a customer places an order, the distribution center receives a signal from the online store to start preparing and sending out the goods.

2. The Whole Process Of E Commerce Distribution Center Services

An e commerce distribution center is built for rapid order fulfillment, focusing on picking, packing, and shipping products efficiently to customers. Below is an outline of how a typical e commerce distribution center operates:

Step 1 - Receiving and storing inventory

Warehouse receiving and storage refers to the unloading and placement of goods into an optimized storage space in an e commerce distribution center. Once the inventory is unloaded and inspected for accuracy, it is stored in a way that maximizes efficiency, using pallets, shelves, or bins depending on the product's size and quantity.

Step 2 - Picking and packing

An e commerce distribution center equipped with technology and managed by a 3PL optimizes the picking process by leveraging warehouse management systems (WMS). These systems automatically place similar orders within close proximity to each other in the warehouse, allowing pickers to reduce their steps and pick orders more quickly and accurately.

Following the order confirmation, a picking list is generated with details on the items ordered, their quantities, and their locations in the e commerce distribution center. As products are picked, they are scanned to reflect real-time updates in inventory levels. Once all items are gathered, they are securely packed, and the appropriate shipping label is attached.

Step 3 - Restocking

When inventory levels are not monitored closely, demand is miscalculated, or products are not restocked on time, stockouts and backorders are likely to occur. For businesses with multiple warehouses, failure to restock items, particularly those in high demand, at one location can lead to split shipments.

3PL distribution centers use inventory management software and automation tools to help you avoid the problems of understocking and overstocking. With these tools, you gain real-time data on inventory levels across multiple locations, allowing you to manage stock effectively, automate restocking, and identify inventory trends.

Step 4 -  Returns management

An e commerce distribution center offers the flexibility to entrust your returns process to a reliable 3PL or distribution partner.

3. 9 Benefits Of E Commerce Distribution Center In Online Order Fulfillment

E-commerce distribution centers are set up to facilitate the order processing, packing, and shipping process for businesses:

• Experienced Personnel: Say goodbye to hiring and managing order fulfillment staff. The e commerce distribution center employs well-trained experts who specialize in warehousing and fulfillment, using the best available technology to ensure smooth and efficient operations.
• Better Shipping Rates & Speeds: By using an e commerce distribution center, you can tap into a range of shipping solutions with various carriers, often benefiting from rates that are lower than what you could secure by yourself. 
• Higher Levels of Efficiency: Upgrading to better technology can optimize order fulfillment, but it often requires a significant investment. By working with an e commerce distribution center, you can take advantage of their established technology and processes, ensuring fast and efficient order fulfillment without the steep cost.
• Increased Inventory Accuracy: Tracking inventory manually is challenging, especially when it comes to preventing overselling. With an e commerce distribution center’s technology, you’ll have real-time data on stock levels, ensuring you don’t sell more than what’s in inventory and giving you the ability to restock products before they run out.
• More Visibility into Supply Chain: With better supply chain visibility, you gain improved cost management, the ability to find operational efficiencies, early identification of potential problems, and the insight to seize opportunities for growth.
• Reduce Overhead Costs: Using a fulfillment partner for inventory storage helps cut shipping costs, maximize warehouse space, and monitor inventory levels. By optimizing these areas, you can significantly reduce your business’s operational overhead.
• Encourage Company Growth: You don’t have to tackle everything on your own. Partnering with the right provider will allow you to grow your business more quickly. With the tools and support offered by a distribution center, you’ll be able to forecast demand more accurately, keep track of inventory, and manage shipping and delivery effectively.
• Improve Customer Service: Nearly all e-commerce stores aim to provide excellent customer service, as it leads to a great customer experience. Store owners know that it's crucial for bringing customers back and generating orders through referrals. Distribution centers can enhance customer service by ensuring accurate tracking and dependable deliveries.

>>> Read more: A Detailed Overview Of 3PL E Commerce Fulfillment Service

4. How E Commerce Distribution Center Affects The Overall Customer Experience?

As e-commerce continues to grow, moving away from in-store purchases to direct consumer shipments, some 3PL companies have updated their older warehouses into specialized distribution centers. This transformation is essential, as conventional warehouses are not capable of managing the order processing speeds that e-commerce requires.

Traditionally, warehouses would store goods in bulk shipments and send them to physical retail stores, where they were sorted and displayed. However, with the growth of direct-to-consumer sales, 3PLs now store retail products in distribution centers as separate inventory units for more efficient handling.

As inventory units multiply, “SKU Proliferation” occurs, creating the need for specialized processes in picking, packing, and delivery. Leading 3PL companies deploy their own technology to manage the large number of SKUs, ensuring a smooth and efficient order fulfillment process.

Moreover, to improve delivery speed and gain a competitive edge, several e-commerce brands have adopted the strategy of turning physical stores into small fulfillment centers, or "Dark Stores." These are typically located in dense urban areas, ensuring faster order processing and delivery.

5. 7 Upcoming Trends In E Commerce Distribution Centers

The growth of distribution centers in the future is expected to be influenced by the following notable trends:

• Upgraded Automation And Robotic Technology

While automation is a key part of warehouse management, AI, robotics, and machine learning will elevate this process, enabling the automation of more complex and varied tasks. This will improve areas like decision-making, planning, and inventory management, all while minimizing errors and cutting down on labor costs.

• Incorporating Groundbreaking Technologies

The combination of advanced analytics, IoT, and blockchain can revolutionize the operations of distribution centers. IoT devices allow for real-time tracking, improving both the security and accuracy of inventory management. Blockchain can protect transactions while boosting supply chain transparency and efficiency. Advanced analytics can refine inventory management, enhance decision-making, and assist in demand prediction.

• Sustainable Initiatives

As environmental issues gain urgency, distribution centers are turning their attention to sustainability. Their sustainability efforts include:

• Incorporating lighting systems and energy-efficient HVAC.
• Using solar energy and other sustainable resources to power building operations.
• Enhancing logistics paths to decrease carbon footprints.
• Operations are increasingly prioritizing waste reduction and the use of biodegradable packing materials.

• Localized Fulfillment And On-Demand Distribution Hubs

To meet growing customer demands for speed, micro-fulfillment and on-demand centers are becoming more prevalent. These smaller, locally-focused hubs allow for faster order fulfillment and are often situated near urban areas, making same-day or even same-hour delivery possible. This shift is particularly notable in industries like consumer goods and supermarkets, where quick delivery is vital.

• Greater Focus On Last-Mile Delivery

Last-mile delivery is often considered the most resource-intensive and expensive part of the distribution process. However, the future of distribution centers lies in the integration of advanced technologies like autonomous vehicles, drones, and sophisticated software for route optimization. These innovations help reduce both expenses and delivery times, while improving overall service quality.

• Flexibility And Scalability

Distribution hubs of the future must be designed for scalability and flexibility, allowing them to adjust quickly to shifts in demand. For example, temporary pop-up distribution centers built during high-demand periods or modular systems that can be easily adjusted in size to meet changing needs.

• Customization And Personalization

As customers increasingly expect personalized products and shopping experiences, distribution hubs must adjust to meet these demands. This shift will require more adaptable procedures for packing, sorting, and handling to ensure that the distribution center can cater to individual customer preferences.

6. 7 Challenges E Commerce Distribution Centers Are Facing 

Here are a few of the major difficulties distribution centers must overcome:

• Labor Shortages And Workforce Management

A critical issue in distribution centers is the availability and management of staff, particularly during busy periods like the holidays. The logistics sector also suffers from high turnover, requiring frequent training for new employees. If not managed well, this can result in diminished service quality and increased costs.

• Space Constraints

With the rapid growth of e-commerce, the demand for warehouse space is on the rise. Large distribution centers are encountering challenges in locating affordable land within city limits. This makes it harder for businesses to expand their storage and fulfillment capabilities or to establish facilities close to critical markets, which is key for quick delivery.

• Complications In Managing Inventory Systems

Inventory management plays a critical role in the success of distribution centers, yet it is a complex task, particularly for businesses managing a large assortment of goods. Keeping precise records, predicting demand to avoid stock shortages or excess, and handling returns effectively are significant challenges. Mistakes in managing inventory can lead to customer dissatisfaction and increased expenses.

• Tech Updates And Integration Processes

Adding new technologies to current operations is often a challenge for distribution centers. They must constantly adapt their systems and processes to align with technological advancements like real-time tracking and automation. 

However, implementing these changes can disrupt operations and incur extra costs. Additionally, ensuring the security and compatibility of all systems is an ongoing concern, particularly as cyber threats become more prevalent.

• Supply Chain Disruptions

Supply chain interruptions in distribution centers can occur due to a range of events, including natural disasters, pandemics, and political unrest. Such disruptions can halt the flow of products, resulting in delays and increased costs. While the challenge is significant, improving resilience through approaches like maintaining buffer stock and expanding the supplier base is essential.

• Eco-Friendly Initiatives And Regulatory Standards

There are various laws governing distribution centers, covering labor, environmental, health and safety standards. While complying with these rules can be costly, the repercussions of not doing so such as penalties and reputational harm are often worse. Additionally, there’s rising pressure to operate sustainably, which includes using eco-friendly materials, reducing carbon emissions, and controlling waste.

• Customer Expectations

With rising consumer expectations for free and fast delivery, distribution centers must work at peak efficiency and accuracy. Any lapse in the process, from order picking errors to shipment delays, can lead to dissatisfied customers and damage to the brand's image.

7. How Ezbuy’s Distribution Center Service Benefits Your E-Commerce Businesses?

Ezbuy’s e commerce distribution center service offers a range of benefits for your eCommerce business. Let’s take a look at how we can help:

• Efficient order fulfillment: Ezbuy’s distribution center is equipped to handle the complete order fulfillment cycle, including receiving inventory, picking, packing, and shipping. By outsourcing these operations, you can allocate more time to focus on areas like marketing and developing new products.
• Cost savings: Choosing Ezbuy's distribution center can save you money in numerous ways. We offer bulk shipping discounts, optimized storage, and reduced operational costs, so you won’t need to invest in expensive warehouse technology, space, or additional staff.
• Scalability: Ezbuy offers a flexible service that grows as your business does. Whether you’re handling a small order volume or scaling up during high-demand periods, our infrastructure adjusts to your changing needs, keeping your business agile and responsive to market trends.
• Improved inventory management: Ezbuy’s distribution center leverages advanced tracking technology to provide real-time visibility of your inventory. This allows you to maintain accurate stock levels, reducing the risk of stockouts or excess inventory and ensuring you don’t incur unnecessary costs or lose sales.
• International reach: If you’re aiming to tap into global markets, Ezbuy’s international shipping services can make it happen. Our network covers multiple regions, helping you deliver to international customers, managing everything from customs to taxes and other cross-border logistics.
• Enhanced customer experience: Ezbuy's distribution center ensures your customers get their orders quickly, in perfect shape, and with reliable tracking information. This ensures a better customer experience and increases the chances of future purchases.
• Returns management: Ezbuy makes returns and exchanges simpler, improving the customer experience while minimizing disruptions in the reverse logistics chain with a well-organized process.

>>> Read more: Small Business Ecommerce Fulfillment: Boost Efficiency & Save Costs

8. FAQs

• How Expensive Is E-Commerce Fulfillment?

3PL providers have their own structures for e-commerce fulfillment pricing, with costs based on factors like the typical size of your shipments, the number of orders you process each month, and how much inventory you store in their warehouse. Standard fulfillment fees include pick-and-pack charges, storage costs, packaging costs, and shipping fees.

A few 3PLs charge a monthly fee for clients that fall below a minimum order threshold, and you may face extra charges for using multiple warehouses. Services such as kitting and barcoding are also typically billed separately.

• Should I Use Ezbuy’s E Commerce Distribution Center Service?

Ezbuy’s e commerce distribution center can enhance your e-commerce operations by reducing costs, improving customer satisfaction, and offering the flexibility to scale your business as needed. Outsourcing logistics allows you to focus on growing your brand and expanding your market reach.

• Can An E Commerce Distribution Center Help With International Shipping?

Several e-commerce distribution centers provide international shipping, managing the complexities of customs, taxes, and cross-border logistics. This is particularly useful for businesses seeking to reach new global markets.

Conclusion

E-commerce distribution center service is more than just warehouses; it’s the engine of modern commerce. By embracing cutting-edge technologies and optimizing processes, Ezbuy empowers businesses to deliver exceptional customer experiences, drive growth, and thrive in the ever-evolving digital marketplace. 

Website: https://ezbuy.jp/en

Email: [email protected]