Why Is 1-, 2-, or 3-Day Ground Shipping Important?
Today, people are accustomed to buying items online and getting their purchases quickly. People can instantly watch movies and television shows from their home computers and their phones; they have instant access to music, software, and everything else they desire. It’s only natural that people no longer want to wait for weeks to get the items they buy online.
For businesses to succeed, they need to have satisfied customers. In order to satisfy those customers, they need to find ways to provide lower shipping costs as well as faster delivery times. This has always been important, but it has never been quite so important as it is in this age of instant gratification.
Amazon has set the bar for fast delivery times and free shipping on certain orders, such as those who have Amazon’s Prime level of service. Not only can they offer free shipping, but they also can get products all the way across the country in about two days—sometimes less.
Of course, the shipping costs are not truly free, they are just absorbed by Amazon. Consumers love the idea of free shipping, but this is very difficult for those retailers out there who do not have the same power as Amazon. Trying to compete against Amazon on delivery times is just as problematic. They have fulfillment centers in many locations around the country, which allows them to make those fast deliveries to their customers.
Smaller retailers will usually employ just a single 3PL warehouse. Because they have only one fulfillment center, trying to match the power of Amazon and other large retailers can be tricky. It becomes important to make sure that the center is located in an area that can help them improve their fulfillment and shipping costs and shipping speeds if they want to keep their customers happy.
Some retailers who are selling through Amazon’s marketplace have the option of fulfilling orders with the same benefits as Amazon Prime, instead of using Amazon FBA. While this seems to hold a lot of potential – after all, consumers on Amazon often look for products that are available with Prime shipping – it also happens to hold quite a few problems. The shippers are required to provide two-day ground shipping throughout the continental United States.
While it does have some advantages, such as the possibility to get more customers, and the sellers can now use their own warehouses and Amazon logistics, it can still be difficult to ship while meeting the standards that Amazon requires to be a part of the Prime program. This puts a lot of pressure on the sellers. Many have found that it simply does not work well for them, and they look for other options.
One of the best choices, which we will be discussing in this whitepaper, is for businesses to utilize a third-party logistics provider, or 3PL, for some or all of their supply chain management needs instead.
How to Understand Shipping Zones, Shipping Times, and Shipping Costs
All sellers today need to have a firm understanding of the shipping zones and the costs associated with shipping from different areas, as well as how long it will take a package to reach various destinations.
The shipping zones are the regions you are shipping to from your main fulfillment location. If you have one fulfillment center, then it means it is not possible (or at least not cost effective) to ship across the country with two-day shipping. However, certain areas of the country will be located in the vicinity of your facility within that timeframe.
To help you get a better understanding of just how long it will take from facilities located in different areas, check the map below.
The above map relates to a fulfillment center located in Atlanta, Georgia. As you can see, the one- and two-day delivery options available to this fulfillment center cover a large portion of the country. It includes FL, GA, AL, MS, SC, NC, VA, MS, LA, AR, MO, IL, IN, OH, KY, WV, PA, MD, DE, NJ. In addition, it includes parts of MI, TX, KS, IA, WI, and CT.
It is possible to have fulfillment centers in various parts of the country, and the location will determine how fast you can ship, and how much it will cost to ship to the various shipping zones.
As you will see as we start to learn more about shipping, your shipping zone will directly correlate to your shipping times. An estimate that is greater than two days can hurt your bottom line and your brand.
How Does Distance Affect Costs?
The farther your products have to travel, the higher the shipping costs are going to be—especially if you hope to still make two-day deliveries like Amazon can do. Let’s break the maps up into zones to give you a better idea of how much of an increase the shipping costs will be.
The areas in yellow would be considered Zones 1 and 2, and the shipping would be your normal ground shipping rates. When you move into the green zone, the price increases by about 9%. By the time you get to the zones that are the farthest away, the price for shipping could increase by about 24%. This tends to be far too much for many companies to be able to offer free shipping on their goods.
|Areas on Map
|Number of Transit Days
|% Increase in Shipping Rates
|Normal ground shipping
|Normal ground shipping
|Rates increase by ~9%
|Rates increase by ~12%
|Rates increase by ~17%
|Rates increase by ~24%
Let’s say you want to ship an item within your main shipping zone, and the cost for that product is $10 ground shipping. When you are shipping to the highest shipping zone, such as parts of Oregon from New York, the cost increases by about $2.40 (24%). Imagine trying to take on that extra cost for thousands of products.
Later, we will talk a bit more about shipping zones in various areas of the country, and how you can alleviate some of the costs by having more than one fulfillment center by working with a 3PL.
Where Is the Majority of the U.S. Population?
When you are trying to determine the best location or locations for your fulfillment centers, you will want to have a good understanding of where the majority of the people in the country are located. This is because your sales are most likely to come from those areas rather than from the more sparsely located parts of the country.
Let’s look at the 10 most populated states according to the 2014 census. This will give you a good idea of where most people live in the country. We will start with the least populated state and work our way to the most populated.
As you can see, many people live close to the coasts, while there are pockets of high population states – Michigan and Illinois – in the Midwest. Your goal is to find fulfillment centers that can reach these locations within two days.
Analyzing Different Warehouse Locations
Outcome With One Single Warehouse Location
If you have just a single warehouse location for your shipping and fulfillment needs, it will affect your shipping zones, times, and costs, as we’ve discussed. In this example, we will look at 3PL Los Angeles and fulfillment centers in the southern CA market. It is a popular location when products are coming in from overseas, and many companies look to have fulfillment centers there. We will look at Los Angeles, Chicago, and New York to see just how much of the country each of these would cover, and to determine how this would affect shipping times and costs.
We’ve chosen these locations because they are popular areas for fulfillment centers, and they can provide many of the highest populated states with two-day shipping.
The above map is for a company that has a fulfillment center located in Los Angeles, California. The color codes on the bottom right portion of the map give you a good indication of just how long it will take to get your items from your center to other areas of the country. For the two-day fulfillment you would be able to reach all of CA, UT, and AZ, as well as parts of NV and ID.
However, achieving those two-day shipments does not extend beyond that. When you start to ship to states that are farther away, it is going to increase the cost of shipping, as well as the time it takes the products to get there. To maintain faster shipping, it will drive the costs of shipping higher.
This map shows a fulfillment center in New York City. This is another popular location, as this is where many products from Europe are brought into the United States. You can see that it is possible to achieve one- and two-day shipping to a good portion of the East Coast. It includes NY, VT, ME, NH, MA, RI, CT, NJ, DE, MD, VA, WV, PA, OH, NC, SC, TN, OH, IN, as well as parts of IL, CA, MI, and KY.
However, you will also notice that you soon get into those shipping zones that are farther away where the time and the costs are going to rise. Next, we will be looking at a fulfillment center in the Midwest.
In Chicago, you can see that much of the Midwest is covered, as well as parts of the East Coast. The states that can be reached with two-day shipping include WI, IA, MO, IL, MI, OH, AR, OK, TN, KY, WV, PA, MD, DE, NJ, CT. States that have partial coverage for two-day shipping include TX, KS, NE, MN, AL, GA, SC, NC, and NY.
While it might cover quite a few states, it still doesn’t provide you with quite as much coverage as you would want. In fact, if you were to have just a single warehouse location, you would find that you are going to struggle to get those shipments to people within a good timeframe if they are not within your “core” states.
What does this mean? It is time to think a bit larger. In the following sections, we will be looking at bicoastal locations, as well as having two and three warehouse locations, and even four warehouse locations. We will be using maps for each of the locations, so you can extrapolate and determine just how much coverage you would receive for two-day shipping.
Outcome With Bicoastal Warehouse Locations
In this section, we will look at a very popular combination when it comes to having warehouse locations on each coast. We will look at Southern California, as well as the New York/New Jersey area.
This map has a fulfillment center originating in Los Angeles. It covers two-day shipping to CA, AZ, UT, and parts of NV. That’s not too much, but when you combine it with the map below, you will find that it does offer you substantially more coverage than having just a single warehouse location.
This map has a fulfillment center in New Jersey. You can see that it covers just about the same areas that you would get from New York for two-day shipping. It does a good job of covering most of the East Coast. For two-day shipping, it covers ME, NH, MA, RI, CT, VT, NY, NJ, DE, MD, PA, VA, NC, SC, TN, WV, OH, IN, and parts of MI, IL, and GA.
When you combine this with a fulfillment center in Southern California, it does provide you with more possibilities and options, and you are hitting many of the most populated areas. However, you are still missing out on a very large portion of the country.
Outcome With Two Warehouse Locations
Instead of bicoastal operations, we will now be looking at what it would be like if you were to have two locations that are not necessarily on the coasts. We will be looking at NV and PA for this example. While you will find that there are some similarities to the example above, there are a few differences, and this is what some of the 3PLs are offering. Let’s get a closer look at these maps to see just what they offer for your coverage.
This map features a fulfillment center in the Las Vegas region. As you can see, it already offers a better two-day shipping zone than California does. It encompasses CA, NV, AZ, UT, CO, and parts of WY, ID, OR, NE, and SD. Now, let’s see what coverage areas would be gained when combined with a fulfillment center located in Pittsburgh, Pennsylvania.
With a fulfillment center located in Pittsburgh, you will be able to cover a substantial portion of the East Coast, along with parts of the Midwest and some other locations. For the two-day shipping, states include VT, NH, MA, RI, CT, NJ, DE, MD, PA, OH, WV, VA, NC, SC, GA, AL, TN, KY, IN, MI, IL, and IA. In addition, it covers parts of MO, WI, ME, and TX.
When you utilize fulfillment centers in these two locations, it does provide for quite a bit of coverage. However, there are still some areas that are not covered. You may find it more advantageous to find a 3PL that can offer some additional locations.
Outcome With Three Warehouse Locations
When you choose to have three warehouse locations, you will find that you can cover quite a bit more of the country. In fact, when you choose a 3PL that can provide you with three centers, it can virtually eliminate three-day deliveries, which should be welcome news to you and your customers. In this example, we will be looking at Southern California along with Illinois and New York to see just how much coverage they can provide.
For example, let’s take a look at a warehouse in Los Angeles, Illinois, and New York.
The maps for each of these locations are above, so take a moment to review all of the states that they can cover. You will find that having three locations provides you with coverage for just about all of the states that you will be shipping to. This means you can still offer two-day shipping—perhaps even free or discounted shipping—without breaking the bank to reach all of these areas. You just need to make sure you have enough goods in each of the fulfillment centers to meet the demand of the customers in those locations.
Of course, there will still be certain areas, such as Alaska and Hawaii, that will not be covered even with three fulfillment centers. However, for the next section, we will look at what can happen when you have four or more fulfillment centers available to you.
Outcome With Four or More Locations
If you feel that you do need to have more locations made available to you for two-day shipping that are not covered under other options, you will want to consider the 3PLs that can offer even more fulfillment warehouses for you. We will be looking at maps for CA, WA, KS, TX, FL, and PA. Although we’ve already covered CA and PA, we will include the maps below for your convenience.
From this map, with a fulfillment center located in Seattle, WA, you can see that it covers a nice portion of the northwestern portion of the country. The coverage allows for two-day shipping to WA, OR, UT, and parts of MT, NV, ID, CA, and WY.
You can see that having a fulfillment center located in Topeka, Kansas can provide you with coverage throughout the Midwest when it comes to two-day shipping. It will cover ND, SD, MN, CO, NE, KS, OK, AR, LA, MS, AL, TN, KY, IN, IL, MO, IA, WI, IN, and OH. It also provides partial coverage for WV, GA, MI, and WY.
With a fulfillment center in Dallas, Texas, you can provide two-day shipping to TX, NM, OK, KS, MO, AR, LA, MS, AL, TN, SC, and parts of GA, FL, KY, CO, IL, and NE. This covers a nice portion of the southern part of the United States.
With a fulfillment center located in Orlando Florida, you can take care of the rest of the South, and a good portion of the East Coast. Two-day shipping will be available for all of FL, LA, MS, AL, GA, SC, TN, NC, KY, and VA. You will also have partial coverage for PA, and WV. In addition, three-day shipping would be possible to Puerto Rico.
With the fulfillment center in this final example, we can cover just about all of the Northeast, and parts of the Midwest. Two-day shipping coverage includes VT, NH, MA, RI, CT, NJ, DE, MD, PA, OH, WV, VA, NC, SC, GA, AL, TN, KY, IN, MI, IL, and IA. It will also cover parts of MO, WI, ME, and TX.
Now, take a moment to think about the maps above. They can provide you with an ample amount of coverage, which is going to drastically reduce your shipping times, and that will provide you with improved shipping costs for you, or for your customers
Who Should Use Multilocation Warehouses?
While it might seem like a great idea for all companies to start utilizing multi-location warehouses through 3PLs, that’s not the case. Those who have startups and who have low order volumes will find that it’s not necessarily a good idea for them. The 3PL companies that provide these services are generally interested in working with larger companies that have a large volume of sales. It simply doesn’t make sense for them to waste warehouse space on the smaller businesses.
However, when you have started to grow and establish your business, and you need to improve your shipping, it is very easy to see just how much help a 3PL will be for your shipping needs. Finding the best order fulfillment service for your unique situation is imperative.