Leading Haircare Brand

Overview

A prominent haircare brand approached ShipNetwork to address the rising costs and logistical challenges associated with their fulfillment operations. The company, renowned for its innovative haircare products, sought to maintain their high delivery performance while optimizing their shipping expenses.

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The Challenge

The client was initially managing their fulfillment and shipping using two strategic facilities located on the East and West coasts. This setup allowed them to maintain consistent 2-3 day deliveries using a combination of ground and expedited services. However, escalating shipping expenses posed a significant challenge. The client faced a projected increase in annual shipping expenses of 5.4%, or roughly $251,244 due to rising carrier costs. They needed to find a way to reduce these costs without compromising on delivery speed and reliability.

Optimized Shipping Methods

To tackle the problem of rising shipping costs, we first explored shifting our client exclusively to ground services from primarily expedited shipping services. This strategy aimed to cut expenses without significantly impacting delivery times. The results were promising:

• Immediate Savings: The shift to ground services would result in projected savings of $22,226.13 per month, totaling over $266,700 annually.

While this approach significantly reduced costs, it wasn't enough to fully maintain the client's 2-3 day delivery promise—a crucial factor for keeping their customers happy and loyal. Although ground services are more economical, they posed an increase in average transit times, potentially impacting customer satisfaction.

Recognizing the importance of delivery speed, we needed a more comprehensive solution to balance cost savings with reliable, fast shipping. This led us to consider a more strategic use of ShipNetwork's extensive network of fulfillment centers.

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The Solution: Distributed Fulfillment

Distributed fulfillment is a logistics strategy that involves using multiple fulfillment centers located in different regions to store and ship products. This approach optimizes shipping routes, reduces transit times, and cuts shipping costs by positioning inventory closer to customers. Here’s how ShipNetwork's distributed fulfillment strategy works:

1. Expanding Facility Usage:

• Traditionally, our client used two strategic facilities on the East and West coasts, which already provided some benefits. However, by leveraging more of ShipNetwork's strategically located warehouses across the country, we could position inventory even closer to their customers. This expanded network allows for more efficient distribution and minimizes transit times. Products can be shipped from the nearest warehouse, reducing the distance they travel and the time it takes to reach the customer.

1. Switching to Ground Services:

• With the increased number of fulfillment centers, our client can switch exclusively to ground services while experiencing only a slight increase in average transit time—from 2.56 days to 2.68 days, still meeting the client’s service performance goals. Ground services are significantly more cost-effective compared to expedited shipping options. This minor adjustment in transit time is justified by the substantial cost savings achieved, providing a balance between cost efficiency and delivery performance.

Implementing our full distribution network reduces the average shipping zones, helping maintain a 2-to-3-day delivery promise with minimal impact on transit times. By strategically placing inventory in multiple locations, we ensure that shipments can be made from the closest possible point to the customer, reducing shipping zones and transit times. This approach balances the need for cost efficiency with the demand for quick deliveries, ensuring a high level of customer satisfaction.

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Real Results: Significant Savings and Improved Efficiency

By adopting ShipNetwork's distributed fulfillment model and leveraging 10 fulfillment centers across the country, our client could achieve remarkable results:

• Significant Savings: Projected monthly savings of $60,382.49, totaling annual savings of nearly $725,000, reducing shipping expenses by approximately 15%.
• Maintained Delivery Performance: Consistent 2-3 day deliveries, ensuring a positive customer experience and high customer satisfaction.

Detailed Benefits

Here’s a closer look at the benefits our client experienced with ShipNetwork's distributed fulfillment model:

• Annual Savings: By utilizing our network of 10 strategically located warehouses across the US, the client is projected to save up to $725,000 annually on shipping costs. This was achieved through optimizing shipping routes, switching to more economical ground services, and strategically positioning inventory closer to customers. These efforts minimized shipping distances and costs, resulting in substantial financial gains.
• Maintaining Delivery Performance: Despite shifting to ground services, the client maintained consistent 2-3 day deliveries. The slight increase in average transit time did not impact customer satisfaction, as products were shipped from the nearest fulfillment center.
• Enhanced Operational Efficiency: Initially, inventory was divided equally across all fulfillment centers. Over time, the client tracked sales patterns and adjusted distribution based on demand at each location, ensuring optimal stock availability. This adaptive approach reduced shipping delays and improved inventory management, leading to quicker order processing and enhanced efficiency.
• Customer Satisfaction: Maintaining 2-3 day delivery times protected the customer experience. Prompt deliveries are crucial for building trust and loyalty in the competitive eCommerce market. The combination of fast delivery and reduced shipping costs provided a competitive edge, helping the client attract and retain more customers.
• Scalability: The distributed fulfillment strategy offered a scalable solution that grew with the client’s business. As order volumes increased, the robust network of fulfillment centers easily handled the additional demand without compromising on delivery speed or efficiency.

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Why Partner with ShipNetwork?

ShipNetwork isn’t just about shipping packages; it’s about delivering promises and driving growth. Here’s why our distributed fulfillment strategy stands out:

• Extensive Warehouse Network: Utilize our network of strategically located warehouses across the country to minimize transit times and optimize delivery routes.
• Scalable Solutions: Our model grows with your business, seamlessly accommodating increasing order volumes without compromising efficiency.
• Xparcel Technology: Leverage Xparcel, our advanced shipping method, to select the most efficient and cost-effective shipping methods. Xparcel integrates seamlessly with our distributed fulfillment network, ensuring optimal shipping routes and reduced transit times.
• Dedicated Support Team: Our knowledgeable support team is always ready to assist, providing guidance and solutions to ensure your logistics operations run smoothly.

At ShipNetwork, we are committed to empowering eCommerce businesses with seamless logistics solutions, enabling you to focus on what you do best. Our distributed fulfillment strategy is designed to provide not just cost savings but also enhance your delivery performance, ensuring your customers receive their orders promptly and reliably.

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Interested in Cutting Costs and Boosting Efficiency?

Contact us today at getstarted@shipnetwork.com or 866-983-7447 to learn how our solutions can transform your shipping strategy and deliver outstanding results.

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