Ecommerce - Transitioning to a Distribution Company

As an e-commerce business, knowing when to transition to a distribution company is crucial for sustainable growth.

Here are some key signs that it's time to outsource fulfillment:

• You regularly handle a high volume of orders, making it difficult to keep up with packing and shipping efficiently.

• Your delivery standards are slipping, causing late or incorrect shipments and customer complaints. About 17% of customers may not return after a bad delivery experience.

• You often struggle to meet customer expectations for fast shipping (like 2–3 day delivery windows).

• Your order volume is reaching levels where manual processes become unsustainable (e.g., 50-100 orders daily or over 3,000 orders monthly).

Costs:

• Shipping expenses are rising, cutting into your profit margins, and you can’t access the bulk shipping discounts that larger logistics providers receive.

• Fulfillment costs are increasing and impacting your revenue disproportionately.

• You spend too much time and resources managing logistics, distracting from core business areas such as marketing, product development, or customer engagement.

• Scalability and Infrastructure:

• You're running out of storage space at your home or current facility to hold growing inventory.

• You lack the necessary infrastructure, technology, or expertise to run warehousing, inventory, and fulfillment efficiently.

• You want to expand into new markets or handle peak season demand, but don’t have the resources or capacity to do so without outsourcing.

Focus and Expertise:

• Logistics tasks take up too much of your time and effort, diverting attention from strategic growth initiatives.

• You lack specialized knowledge in areas like optimizing shipping routes, managing customs regulations for international expansion, or implementing advanced inventory systems.

Benefits of partnering with a distribution company:

• Cost Savings: Reduced shipping rates, lower warehousing and labor costs, and access to economies of scale.

• Improved Efficiency: Faster order processing, automated inventory management, and quicker order fulfillment.

• Scalability: Easily adapt to changing order volumes, market demands, and growth.

• Faster Shipping & Fulfillment: Optimized routes and fulfillment centers for quicker deliveries.

• Access to Technology & Expertise: Use of advanced logistics tools and specialized knowledge.

• Geographic Expansion: Reach new markets and customers more effectively with a network of warehouses.

• Reduced Risk: Lower risks related to market entry, product damage during transit, and overstocking.

In short, switching to a distribution company becomes necessary when managing fulfillment in-house starts to hinder your growth, profits, and ability to meet customer expectations. Outsourcing allows you to leverage the expertise and resources of a specialized partner to streamline operations, cut costs, and focus on the core aspects that grow your business.

We can handle storage, distribution, shipping, and logistics from start to finish. For more information about AW2’s Commercial Warehouse and Storage Service, please contact Nicole Dean, General Manager, at 702.331.8201 or email nicole.dean@aceworldwide.com

Photo: Freepik