How to Choose a Distribution Center for Your Business
You may have heard both good and bad things about distribution centers, but depending on the size of your growing business it may be time to find one that fits your needs. If you choose right, it will make your life much easier and help keep your business more organized and running smoothly. There’s a lot to know—exactly what services to look for and expect, what to avoid, and of course, when you should find one. Let’s break it down.
What a Distribution Center Can Do for Your Business
Distribution centers receive product, hold it in a warehouse, and then ship it to the desired location(s) at a specified time. This means they act as a warehouse for your products so you don’t need to hold all that inventory in your home or own facility, and they also serve as your shipping department. Many follow the regulations put in place by the big box stores like Target or Ulta, meaning you’ll have an easier time meeting their requirements, which are often strict and can be quite expensive.
Some distribution centers can drop ship for you, meaning once product arrives they track sales made from your website and ship to the end user directly. Most can handle inventory and will produce reports monitoring stock levels, in addition to handling returns. And although slightly less common but still possible, some centers will provide kitting services, mail out subscription boxes, or even include direct mailers with samples as a service.
Clearly many services are available to you, so it becomes a matter of balancing need and budget. Every service listed will come with its own fee, and they add up.
Do You Need a Distribution Center for Your Company?
It may be time to consider these distribution and logistic services as your brand really starts growing. If you’ve run out of space in your facility or home to house ingredients, finished goods, or even packaging, you can store them in a warehouse. If you are busy traveling and receive multiple orders in a day, a center can ship them for you via a website integration so you don’t have to stop everything and find the nearest post office.
Many people find that using a distribution center is a money saver in the long run, circumventing the need for additional staff or renting storage space without the other benefits.
What to Look For: Distribution, Logistics, Location, and Customization
Once you begin the search for the perfect distribution center (DC), there are several things to look out for. Firstly, of course, you need a distribution center that has all the services you need. In addition, you should consider whether you need your DC to be compliant with international regulations or be located nearer to those countries. This also means having a process to handle customs and any other regulatory issues in the receiving countries. Or perhaps your products are sensitive to temperature and you should look for a climate controlled facility.
Secondly, your DC should be willing to be flexible with your specific needs and design a somewhat-customized solution for you. This might be rushing certain products over others whenever they’re sold, or creating a custom kitting service for you.
Thirdly, location matters! If you are selling primarily in the United States, you’ll want a distribution center that is strategically located to save on shipping. It should likely be either near your manufacturer or somewhere that is positioned between your active markets. For example, if Essential is your manufacturer you might consider a DC located on the west coast. This means you save on shipping costs between the manufacturer and the DC. California is also a large skincare market so it makes sense to locate your shipping hub nearby.
Alternatively, if you are on the east coast and Essential is your manufacturer, it makes sense to place your DC in the Midwest to serve both the coasts reasonably well.
And finally, if possible, tour the facility to ensure it’s organized, will meet your needs, and ideally ask for a sample inventory report.
What to Watch Out for with Distribution and Logistics Centers
The primary thing to avoid when working with DC’s are the penalties that can stack up. Depending on the business, you might be penalized for forgetting a packing slip, sending the wrong product, accepting orders but being out of inventory, if the connection between your website and their programs break, or a variety of other factors.
Summary: Increasingly Useful as You Grow
The fees and requirements may seem like more trouble than they’re worth, but as you grow, distribution centers can become crucial to your business. If you’re in that in-between stage where you’re uncertain, consider taking a tour, figuring out what will save you the most time, and go from there.
Our customers have used quite a few distribution centers in the past, and although we can’t take any liability for these suggestions we’ve had good experiences with the following places:
–Service Mailers & Fulfillment (California)
–4th Way Fulfillment (California)
–TWE (Chicago and Houston)
Let us know what has worked for you!