Inventory Management 5 min read
Why Does Decentralizing Inventory Work for Your eCommerce Store?
June 2, 2021 by Srishti Arora - 5 min read
- What Does Decentralizing Inventory Mean?
- Difference Between Centralized and Decentralized Inventory
- Benefits of Decentralized Inventory
- How to Decentralize Your eCommerce Inventory?
34 percent of businesses have shipped an order late because they inadvertently sold a product that was not in stock. This indicates that accurate inventory management is a genuine concern for any eCommerce business. A fault in inventory management can lead to a considerable loss or accumulation of unsold inventory. Moreover, if your inventory is not managed correctly, it can lead to slower order processing and, eventually, poor shipping. This means that you must sort out the first step of order fulfillment to run the rest successfully. Decentralizing inventory is an excellent way to organize your inventory systematically and accurately deliver to every household in the country. Let’s have a look at what inventory decentralization means and how it can improve your business performance.
What Does Decentralizing Inventory Mean?
Decentralizing inventory means distributing your inventory across several locations. You store inventory in multiple warehouses or fulfillment centers and allocate different SKUs in different locations.
Different marketplaces like Flipkart, Amazon, etc., have different warehouses across the country and they rely on these multichannel centers to process all incoming and outgoing orders. Decentralizing inventory has several advantages like reduced shipping cost and time, faster order processing. These ultimately lead to a delightful customer experience, an increase in repeat purchases, etc.
Difference Between Centralized and Decentralized Inventory
Centralized inventory refers to the process of storing inventory in one place. If you have a single warehouse from where you process and ship all eCommerce orders, you have a centralized inventory system. It helps with centralization of the process by bringing all SKUs at one place and also simplifies inventory tracking. Also, you can conduct regular inventory audits to assess and streamline inventory flow.
Decentralized inventory refers to the inventory that is stored in multiple locations. For example, if your inventory is stored in different addresses across the country, it is decentralized. It is better with regard to centralized inventory as it helps store the products closer to the customer’s delivery location and you can deliver much faster. Also, as the products are stored closer, you will be able to reduce shipping costs by a huge margin.
Benefits of Decentralized Inventory
Decentralised inventory gives you the advantage of faster delivery. Since limited SKUs are stored around different locations, you can segregate your target audience and store products closer to their addresses. So if your inventory is stored in Bengaluru and you want to deliver in Tamil Nadu, you can easily deliver in 2 to 3 days whereas if you shipped from your warehouse in Gujarat, it will take you longer.
Reduced Shipping Costs
The next vital benefit of decentralised inventory is the reduced shipping costs. Storing products nearer to customers can help you ship at lower intracity and intra zone rates. Since all courier companies function on shipping zones, you can strategically place your excuse to reduce your shipping costs and enhance your delivery performance.
Easier Risk Management
Decentralized inventory also helps you mitigate additional risks associated with inventory and warehouse management. Situations like stock out and accumulation of debt stock can be avoided if your inventory is stored in different locations and processed regularly. The audit is carried out and can also be more comprehensive and you will be able to forecast demand much faster and accurately.
How to Decentralize Your eCommerce Inventory?
3PL Fulfillment Providers
3PL fulfillment providers like Shiprocket Fulfillment have fulfillment centers located in different parts of the country like Bengaluru, Mumbai, Kolkata, Delhi, and Gurugram. You can easily ship your inventory to these fulfillment centers and leave the fulfillment process to them. This can help you expand your business without additional capital investment and you can also decentralize or eCommerce inventory in order to cover a wide range of pincodes and deliver to your customers. 3PL fulfillment providers are your best bet if you want a seamless fulfillment experience along with improved order accuracy and delivery performance.
Rent Multiple Warehouses
Another option is to rent multiple warehouses across the nation in different locations and conduct your fulfillment operations from there. You can decentralize your inventory by manually operating these in different ways and fulfill orders as they come in. This is a more cumbersome process as you will have to pay the rent for different locations and also set up the infrastructure for management and fulfillment.
Sell on Marketplaces
Since marketplaces like Amazon and Flipkart already have their fulfillment centres in place, you can start selling with them in order to avail their services. However, with Amazon and Flipkart your brand name gets restricted to the market places and you cannot run your D2C business as lucratively.
Decentralising your inventory is an intelligent move if you want to curtail your inventory costs and ensure that the orders are processed ans delivered in the most accurate manner. You can also try this if you are looking to reduce your shipping costs and enhance your delivery performance which will eventually lead to our delightful customer experience.