E-commerce Fulfillment Capacity Expansion in Kentucky
Founded in 2015, Stord, the company behind this expansion, delivered over 30 million packages last year, reaching 11.5% of U.S. homes. This facility is set to play a crucial role in the logistics network by shipping over 5 million packages annually, integrating climate-controlled storage and robotic automation. 3PLs can absorb fluctuations in order volume, offering flexibility in outsourcing solutions.
The e-commerce industry is witnessing a significant development in Kentucky with the doubling of fulfillment capacity through the leasing of a 525,000 square foot warehouse in Hebron. This facility is set to play a crucial role in the logistics network by shipping over 5 million packages annually, integrating climate-controlled storage and robotic automation.
Strategic Location and Operational Infrastructure
Situated near major transport hubs and highways, the Hebron facility is strategically positioned to enhance distribution efficiency. Operated by over 300 employees and contractors, the facility is equipped to handle the increased order processing demands, particularly during peak shopping periods like Black Friday and Cyber Monday when order volumes traditionally double.
Founded in 2015, Stord, the company behind this expansion, delivered over 30 million packages last year, reaching 11.5% of U.S. homes. This geographic expansion necessitates a distributed inventory model to efficiently manage multi-channel requirements and complexities that arise as businesses grow through different phases of fulfillment maturity.
Phases of Fulfillment Maturity
The journey of e-commerce fulfillment can generally be categorized into four phases. In the initial phase, founders typically manage fulfillment from personal or small rented spaces. As order volumes increase, businesses transition to Phase 2, hiring employees to cope with the growing demand by forming a small in-house team.
Phase 3 involves adopting a hybrid fulfillment model where some SKUs and regions are outsourced, while local orders are processed internally. This phase also provides an opportunity to test new third-party logistics (3PL) partnerships. In Phase 4, businesses fully outsource fulfillment, allowing 3PL partners to manage warehousing and negotiations, enabling companies to concentrate on core activities.
Advantages of Outsourced Fulfillment
Outsourcing fulfillment offers several benefits, including improved order processing speed and access to advanced logistics technology. Companies can achieve scalability more easily and focus on their core business activities. Outsourced fulfillment also enhances inventory management through specialized providers and improves customer satisfaction with faster shipping options.
Outsourcing can reduce shipping errors and returns while providing flexibility to handle seasonal demand fluctuations. It also grants access to a wider distribution network and expertise in compliance and regulations from fulfillment partners. Documenting fulfillment processes, starting transitions during slow seasons, and maintaining regular check-ins with 3PL partners are vital for a smooth transition.
Considerations for Businesses Transitioning to 3PL
As businesses consider transitioning to a 3PL model, assessing the product profile is the first step, especially regarding the fragility of items, which impacts fulfillment decisions. 3PLs can absorb fluctuations in order volume, offering flexibility in outsourcing solutions. Companies are advised to leave an overlap during the transition to ensure continuity and share forecasts with their 3PL partners, signing clear service level agreements to establish mutual expectations.
Ultimately, the decision between self-fulfillment and outsourcing depends on a variety of factors including business scale, product characteristics, and the desire for scalability and efficiency. For many, embracing outsourced fulfillment represents a strategic move to enhance operational capabilities and customer satisfaction in the rapidly evolving e-commerce landscape.