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Reducing operational costs by switching to on-demand warehousing

December 6, 2023
5 min read

Finding a viable solution: Are you prepared to meet your shipping promises?

Logistics is always complicated. One of the key findings from the Bezos eCommerce Fulfilment and Logistics survey is that for retailers warehousing remains a key obstacle to offering better experiences to customers. The problem is, it is only going to get more complex as retail continues to diversify.

Dealing with expensive shipping

When retailers are asked why they weren’t offering free or fast shipping, the number one reason they stated was “Outbound costs are too high with the existing network.”

The last mile, or the distance goods travel from the fulfilment centre to the final destination, impacts outbound costs. According to the respondents, 53% do not offer free shipping because of these outbound costs that are too high and 37% do not offer 1-2 day shipping because of it.

Fixed infrastructure and logistics solutions get in the way

74%of our respondents said they are only able to work with 1-3 fulfilment centres in their distribution network. With only 1-3 fulfilment centres, infrastructure is limited— making it difficult to reduce outbound costs, optimise the distribution network, and offer free, fast delivery because the distance travelled for outbound shipments is too long to be cost-effective.

Solutions for managing distribution also plays an important role. The two most common solutions for warehousing are to “Rent and operate warehouses” (48%) and “Work with 3PLs” (42%). Both of these solutions are long-term and provide little flexibility to improve your distribution network and delivery promise.

Sales, costs and competitors are major concerns

In addition to the numerous barriers keeping businesses from offering fast and free shipping, we also asked our survey respondents, “What keeps you up at night?” Most respondents said “Costs” (55%) and “Sales” (46%), followed by
“Competitors” (37%).

However, we also found that respondents that have more than 500 orders per day were more likely to cite Amazon as one of their company’s top challenges, with 31% citing it as an issue compared to 16% of all responses.

Bridging the gap

Customised Warehousing

Our findings reveal that currently retailers and brands are facing a couple of key challenges, mostly related to logistics. Most of them are struggling with the choice between meeting the demands of their customers or keeping up withAmazon. In this struggle, they are faced with the limitations of fixed warehousing infrastructure and small logistics networks that prohibit them from improving their delivery promise.

Having a flexible logistics strategy with on-demand warehousing can help retailers a great deal. First, you must understand your customer, then you can optimise for their wants accordingly by adjusting your logistics network and delivery strategy.

Positioning your inventory closer to your consumers is an efficient way to improve your delivery promise and lower transportation costs. With on-demand warehousing like Bezos, you get a flexible, variable-cost model for adding warehousing and fulfilment nodes to your distribution network.

How on-demand warehousing can help your retail business

Having on-demand warehousing network provides retailers and brands an unprecedented level of flexibility. They are not required to sign long-term contracts or pay for start-up costs. Bezos connects retailers and brands to their wide network of warehouse providers across United Kingdom.

Every warehouse in the United Kingdom is connected through a single, standardised tech platform, making it incredibly fast and simple to expand your logistics network to match business demands or improve delivery options.

Because Bezos network is so vast, you can access capacity and services in whichever area you need. Wherever and whenever you have a need, you can surely find a provider with the right specifications for you.

Reduce shipping costs

On-demand warehousing provides retailers and brands to store their inventory at pop-up warehouses and fulfilment centres that are close to their customers, saving them on the most expensive part of their supply chain: transportation.

Transportation costs account for nearly two-thirds of logistics costs, but by positioning goods closer to customers, retailers and brands can reduce shipping costs through shorter last miles and taking advantage of ground shipping.

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