The location of your warehouse can play a significant role in your store’s profitability. Consider the example of an e-commerce store selling licensed NBA jerseys. In this case, an L.A. Lakers jersey is more likely to be sold in and around Los Angeles than anywhere else. Stocking this inventory at a warehouse close to Los Angeles is common sense.
On the other hand, let us consider a store that sells licensed Disney merchandise online. In this case, the buyers come from all across North America, and even the world. Would you identify your major markets and stock your inventory close to these locations? Or would you stock your inventory close to your manufacturer’s location and ship them to the customer on demand?
There are no easy answers here, especially considering that rival stores like Amazon ship their products overnight. Housing your inventory close to the manufacturing location could dramatically increase shipping time, and this puts your store at a disadvantage. At the same time, if your products are made in a country like China, your holding costs here are significantly lower than what it would cost to stock inventory in the U.S.
Here are a few factors to take into account when determining the location of your warehouse. (more…)