Regional warehousing: the answer for e-commerce

Amazon fulfillment is something of an industry benchmark for many e-retailers. The undisputed king of e-retailers has dominated the market through its aggressive growth and impressive customer offering. It is expected that by the end of 2016 Amazon will have 12 fulfillment centres across the UK. Regional distribution has allowed Amazon to set the standard in terms of customer service, offering one hour delivery times to its prime customers.

At The Logistics Business we are continually asked the question “If Amazon can do it, why can’t we?”. The simple answer is… you can, but be prepared for a significant outlay in capital costs alongside ongoing high operational costs. A firm’s supply chain should be resourced in order to meet the demands of the customer. Simplistically, if demand is there, then there is profit to be made.

Regional warehousing is not an approach that every business should look to adopt, there are pro’s and con’s to centralisation vs decentralisation. At The Logistics Business we often talk about transparency across the supply chain. Additionally, this applies to transparency across the entire business.

Regional warehousing could well be the answer if customers are located in small pockets on either side of the country. It is the responsibility of business units to come together and discuss business strategy and opportunities. In doing so, businesses can make strategic decisions for the supply chain moving forward. The supply chain should never be a bottleneck to the rest of the business.

Amazon uses its supply chain to differentiate itself from competition and increasingly this is what all businesses should look to do, to maximize profitability through meeting customer expectations, hence why regional warehousing is the answer but not for all businesses. Due diligence of the customer base is therefore fundamental to the success of any supply chain strategy.