The Importance of Ecommerce Distribution Centres for Retail in Today's Online Landscape

In the fast-paced world of ecommerce, traditional warehousing may not provide the speed and efficiency you need to compete with other fast-shipping online brands. As your business grows, the complexity of order fulfilment and managing supply chains at scale may also become a burden.

Distribution centres managed by third-party logistics (3PL) companies have become increasingly popular among ecommerce businesses. These specialised facilities are rapidly replacing traditional warehouses with their focus on agile logistics. This article will explore the numerous benefits of using distribution centres to help your ecommerce business achieve its goals.

WHAT IS AN ECOMMERCE DISTRIBUTION CENTRE?

An ecommerce distribution centre is a specialised warehouse with fast and efficient order fulfillment processes. This type of storage facility may also be called a fulfilment centre. An ecommerce distribution centre is the central hub for your order fulfilment process in a specific geographic location.

WHY ARE DISTRIBUTION CENTRES IMPORTANT FOR ECOMMERCE?

Third-party logistics (3PL) companies use these strategically placed distribution centres to speed up delivery and reduce transportation costs. The decentralisation of inventory puts your products near the “last mile” of delivery in primary markets, making it easier to offer faster shipping options to more customers. You can also use ecommerce distribution centres to expand into new territories. With products on hand near untapped markets, you can start advertising in these locations to drive sales.

WHAT IS THE DIFFERENCE BETWEEN DISTRIBUTION CENTRES AND WAREHOUSES?

Distribution centres and warehouses are both storage facilities that fulfill orders, but with some key differences. See the table below.

	Distribution Centres	Warehouses
Function	Ship orders with speed and efficiency	Provides long-term storage and standard order fulfilment
Warehouse Layout	Optimised layouts for fast receiving, storing, and shipping of goods	Simpler layouts with products stored on racks or shelves
Inventory Management	Real-time inventory management systems to optimise inventory levels and order fulfilment	More complex inventory management systems to track stock levels and ensure optimal storage conditions for specialised goods
Order Fulfilment	Automated processes to speed up order fulfilment	May use automation and advanced technologies, but doesn’t rely heavily on them
Locations	Located closer to end customers for quicker shipping and lower transportation costs	Located in areas with lower warehouse rental rates and lower labour costs
Customer Experience	Value-add services such as customised packing or returns processing	Provides warehousing space only

WHAT ARE THE BENEFITS OF USING A DISTRIBUTION CENTRE FOR YOUR ECOMMERCE BUSINESS?

Outsourcing your to a third-party logistics (3PL) provider gives you access to a network of distribution centres. While your 3PL runs your supply chains with maximum efficiency, you can focus on sales, marketing, and designing new products. Imagine how much free time you’ll have when you offload order fulfilment to seasoned professionals. Here are more ways an ecommerce distribution centre can benefit your business.

COST-EFFECTIVE SHIPPING

Ecommerce distribution centres consolidate shipments to make routes more efficient. Their high shipping volume also allows them to negotiate lower rates with carriers. These strategies help reduce transportation costs resulting in cost-effective shipping.

ADVANCED INVENTORY MANAGEMENT

Avoiding out-of-stock items is crucial to prevent lost sales and poor customer experiences. Ecommerce distribution centres use inventory management software to track real-time product availability. This technology helps your business maintain sufficient inventory levels and respond to changes in demand.

FASTER DELIVERY TIMES

According to Statista, more than 40 percent of US consumers expected their online delivery to take two to three days. Distribution centres located near major markets help you reduce delivery times and associated costs. For example, SEKO Logistics offers True Next-day Delivery to the US and UK. Offering next-day shipping can help you attract more customers looking for on-demand services.

SIMPLE RETURNS PROCESS

A report by IMRG states that a quarter of all consumers return between five and 15 percent of the items they buy online. Designing a simple returns and exchanges policy is one of the best ways to keep your customer engaged long enough to build brand loyalty. This is especially true if you operate an online fashion brand where the return rate is 26 percent of online purchases. An ecommerce distribution centre has the systems to handle returns and exchanges with speed and efficiency.

PLAN FOR FUTURE DEMAND

Adapting quickly to changes in demand without compromising your logistics helps you capitalise on new business opportunities. Ecommerce distribution services provide flexibility to grow your business without additional physical locations or designing elaborate supply chains. The best make it simple to scale warehousing and order fulfilment to your new markets.

IMPROVED CUSTOMER SERVICE

Ecommerce distribution centres have highly trained staff specialising in shipping, handling returns, and customer service. This level of support helps customers get quick and effective solutions to their problems. Distribution centres often use advanced technology and inventory management techniques to process orders efficiently and accurately. Their use of technology can lead to faster shipping times and fewer errors. Some distribution centres provide 24/7 support to ensure customers receive prompt assistance anytime.

HOW HAS THE GROWTH OF ECOMMERCE IMPACTED THE NEED FOR DISTRIBUTION CENTRES?

Ecommerce has shifted away from in-store sales to an increasing number of products shipped directly to consumers. Some third-party logistics (3PL) companies transformed their traditional warehouses into distribution centres to meet the growing demand for direct-to-consumer sales. Traditional warehouses aren’t fully equipped to handle the order processing speeds required for ecommerce.

Before this direct-to-consumer shift, traditional warehouses would store various products in one bulk shipment and deliver the goods to a physical retail location. Then, the retailer would sort and display products in their store. Now, 3PLs store retailers' products as individual inventory units in distribution centres.

The increased number of inventory units leads to a phenomenon known as “SKU Proliferation” and requires specialised picking, packing, and shipping processes. Sophisticated 3PLs use in-house technologies to handle the high volume of SKUs and create a smooth order fulfilment process.

To gain a competitive advantage, some online retailers have tried to improve their “Fulfilment Responsiveness” with physical retail stores acting as small warehouse fulfilment centres. These "Dark Stores" are usually located closer to their customers in congested urban areas and help with faster delivery.

HOW DO ECOMMERCE DISTRIBUTION CENTRES HELP BUSINESSES MANAGE INVENTORY AND STREAMLINE FULFILMENT PROCESSES?

Technology and automation play a central role in helping third-party logistics (3PL) companies optimise their distribution centres for ecommerce. These technologies require a heavy investment, ongoing maintenance, and continuous innovation to stay ahead of the curve.

Partnering with a tech-savvy 3PL ensures your business always has access to the latest logistics technology while saving you from the high costs of software development. Take a look below to learn more about how distribution centres optimise the fulfilment process and enhance inventory management.

Inventory Management Systems: Barcodes and RFID chips help provide real-time tracking of inventory levels to ensure product availability.
Automation Technologies: Conveyor systems, automated storage, sorting machines, and robotics help reduce labour costs and streamline operations.
Fast & Accurate Order Fulfilment: Automation technologies help reduce the risk of errors and speed up fulfilment processing.
Warehouse Management Systems: These systems help distribution centres manage the movement of products—from receiving, storing picking, and shipping.
Efficient Layouts: An ecommerce distribution centre uses strategic layouts to minimise the time and distance required to move products from one location to another.
Transportation Management Systems: These systems optimise delivery routes and carrier selection to make transportation more cost-effective.

SEKO has developed best-in-class software solutions to help your business achieve the highest level of operational efficiency. These platforms include MySEKO, SEKO 360, and SEKO IMS. To learn more about these industry-leading technologies, please visit this page: SEKO’s Specialist Technology Systems.

HOW DO ECOMMERCE DISTRIBUTION CENTRES CONTRIBUTE TO THE OVERALL CUSTOMER EXPERIENCE FOR ONLINE SHOPPERS?

It’s not enough to have a great product. Your company needs to create a memorable customer experience. An ecommerce distribution solution provides many value-added services to help you achieve this goal. Below are some of the services you can use to your advantage.

More Shipping Options: Offer expedited shipping, same-day delivery, and curb-side pickup to cater to the different needs of your customers.
Order Tracking: Technologies like automated order tracking and email notifications inform customers of estimated delivery times.
Returns & Exchanges: A convenient returns policy makes it easier for customers to engage with your business and develop a strong relationship.
Customer Support: Some ecommerce fulfilment centres provide customer support 24/7/365 to resolve any issues your business or customers may encounter.

WHY HIRE SEKO FOR ECOMMERCE DISTRIBUTION CENTRE SERVICES?

SEKO offers various solutions to help your business optimise its supply chains and improve the customer experience. Some of the best businesses in the world trust SEKO to provide fast and reliable order fulfilment services. We take a client-first approach to understand your needs and design effective solutions around them. Choose SEKO as your 3PL and become a member of our thriving business community.

Over 40 Years of Expertise: SEKO has provided businesses of all sizes with first-class logistics solutions for decades. We’re here to help you navigate the complex world of ecommerce logistics.
Advanced Technologies: SEKO has developed best-in-class software solutions that integrate with the most popular ecommerce platforms to give you complete visibility into your supply chains. These technologies also help enhance your fulfilment process for fast and efficient delivery.
Global Reach: With our expertise in international shipping, currency exchange, and customs regulations, your global expansion will be a simple process. Our 15 multi-channel distribution centres located across 60 countries allows us to provide you with end-to-end global logistics.
Quality Customer Service: SEKO is committed to providing exceptional customer service. Our dedicated team of experts can answer your questions and provide support. We’re committed to giving you the highest care and attention.

Read this case study to learn how SEKO secured a US distribution centre for Canyon Bicycles and gave them access to American buyers.

Inventory Management Systems: Barcodes and RFID chips help provide real-time tracking of inventory levels to ensure product availability.
Automation Technologies: Conveyor systems, automated storage, sorting machines, and robotics help reduce labour costs and streamline operations.
Fast & Accurate Order Fulfilment: Automation technologies help reduce the risk of errors and speed up fulfilment processing.
Warehouse Management Systems: These systems help distribution centres manage the movement of products—from receiving, storing picking, and shipping.
Efficient Layouts: An ecommerce distribution centre uses strategic layouts to minimise the time and distance required to move products from one location to another.
Transportation Management Systems: These systems optimise delivery routes and carrier selection to make transportation more cost-effective.

HOW DO ECOMMERCE DISTRIBUTION CENTRES CONTRIBUTE TO THE OVERALL CUSTOMER EXPERIENCE FOR ONLINE SHOPPERS?

More Shipping Options: Offer expedited shipping, same-day delivery, and curb-side pickup to cater to the different needs of your customers.
Order Tracking: Technologies like automated order tracking and email notifications inform customers of estimated delivery times.
Returns & Exchanges: A convenient returns policy makes it easier for customers to engage with your business and develop a strong relationship.
Customer Support: Some ecommerce fulfilment centres provide customer support 24/7/365 to resolve any issues your business or customers may encounter.

WHY HIRE SEKO FOR ECOMMERCE DISTRIBUTION CENTRE SERVICES?

Over 40 Years of Expertise: SEKO has provided businesses of all sizes with first-class logistics solutions for decades. We’re here to help you navigate the complex world of ecommerce logistics.
Advanced Technologies: SEKO has developed best-in-class software solutions that integrate with the most popular ecommerce platforms to give you complete visibility into your supply chains. These technologies also help enhance your fulfilment process for fast and efficient delivery.
Global Reach: With our expertise in international shipping, currency exchange, and customs regulations, your global expansion will be a simple process. Our 15 multi-channel distribution centres located across 60 countries allows us to provide you with end-to-end global logistics.
Quality Customer Service: SEKO is committed to providing exceptional customer service. Our dedicated team of experts can answer your questions and provide support. We’re committed to giving you the highest care and attention.

Read this case study to learn how SEKO secured a US distribution centre for Canyon Bicycles and gave them access to American buyers.

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