Top 4 Reasons Why Fulfillment Location Matters
Real Estate brokers will tell you that it’s all about fulfillment location, location, location. So it is when looking for the right fulfillment location. Here are four reasons why location matters that are often overlooked when evaluating fulfillment center choices.
Both inbound and outbound transportation cost is the #1 reason location matters. Consider where your customer base is located. The closer you are to your customers, the lower your outbound transportation cost. This is a no brainer, but the other consideration is inbound transportation cost. What might be a good location from a customer standpoint may not be a good location for inbound transportation. Both of these costs should be taken into consideration and the savings on the outbound side needs to be weighed against any increased cost on the inbound side, or vice versa.
During the busy season, every fulfillment location needs temporary labor. The economic recovery has effected various cities differently. A fulfillment center located in a tight labor market may have trouble filling their workforce during peak times, or if they can, it may be at a premium price.
Availability of Real Estate
Just as in the case of labor, many cities are experiencing tight real estate markets. Fulfillment companies located in tight real estate markets may not be able to find the seasonal or expansion space they need and at a rental rates that allow them to be competitive in the market.
Local Tax Climate
Taxes affecting companies who sell direct-to-consumer vary from state to state. Besides the various approaches to on-line sales from a sales tax perspective, many states and localities still have inventory taxes that must be paid by the on-line retailer on inventory located at the fulfillment center. At least a general review of the business taxes affecting on-line retailers should be done for any state being considered for the site of a fulfillment center.