The Decentralization of Ecommerce Shipping

The rise of decentralized fulfillment options is emerging but the way the strategy will be ultimately realized is yet to be seen.

There are many ideas in the space and companies tackling the opportunity to make shipping times faster and ordering online more convenient for consumers.

No specific model has yet emerged to dominate the industry as a go-to standard for ecommerce sellers.

Let’s look at how the decentralized movement is affecting ecommerce.

Centralized vs Decentralized Fulfillment: The Decentralization of Ecommerce Shipping

Inventory decentralization is an emerging strategy for ecommerce product fulfillment that can compete with the standards set by Amazon.

Decentralization of shipping utilizes multiple warehouses to store goods closer to the end buyers so orders can be fulfilled faster. This is especially essential for multi-country fulfillment and taking advantage of the global market for your products to increase order sales across borders.

Some see the trend of centralized models diminishing in many industries, such as computing and airline travel.

One common argument against the decentralized shipping model is the belief that it tends to have increased operational costs. But, when you partner with a fulfillment provider that has an integrated fulfillment system and multi-warhouse options, both domestically and globally, then the operational costs become marginal.

How the execution of this trend pans out is yet to fully take shape. Some have argued that there will be fulfillment by everyone (FBE) where random individuals and businesses will monetize underutilized assets by adding them into networks and, thus, building out a new infrastructure in a way similar to the rise of AirBnB and Uber.

Proximity of Inventory to End Buyer Decreases Shipping Time

The Amazon threat increased online buyer expectations and is forcing the decentralization movement to speed up because not having quick delivery times is a conversion killer for online sales.

Last mile decentralized fulfillment is thought to be the solution to affordably decrease shipping times while remaining cost competitive to the threat of larger players like Amazon.

Decentralized in the context of fulfillment can be more easily understood as one’s e access to multiple warehouses for product distribution. Amazon maintains a distribution advantage because it operates its own decentralized warehousing centers across the world.

One example of the move to local distribution is the network being set up by Shopify, you can find out more about it in the video below.

Free Shipping: The Amazon Effect

Again the Amazon threat rears its head because of the convenience of Amazon Prime and it’s free shipping option; and also, Amazon’s free shipping offer when an order reaches a minimum cuttoff value to make it profitable for them to ship for free.

To remain competitive, maintain high conversion rates and keep in business, free shipping remains the key that many still have not adequately used to unlock more sales.

There are many tactics to bake fulfillment fees into the product product pricing and also differentiate the product – even commodity items – by creative positioning via options like bundling, guarantees, and required order value minimums to earn free shipping.

Decentralized Order Fulfillment a Response by Merchants and Retailers to Take on Amazon

Micro-fulfillment and the current spread of new options opening up against centralized models can largely be seen as a response to Amazon’s dominance in the online retail space and the expectations Amazon has created for the standard of how conveniently products can be delivered once ordered online.

The consumer stands to benefit from this order fulfillment trend.

Decentralized fulfillment will allow online shoppers shorter delivery windows and more options for quick delivery outside of the Amazon ecosystem.

Thus, a more diversified market is emerging for those shoppers who need their purchased quickly without having to go to a retail shop to get them.

For ecommerce sellers, there are challenges to adapt.

But it is becoming increasingly easier for ecommerce merchants as many fulfillment providers, such as Fulfillment Bridge, are building the technologies and networks to enable same-day shipping and democratize fulfillment for all.

The infrastructure of the future is being laid as we speak, decentralized fulfillment is becoming a reality for ecommerce.

This article originally appeared on Fulfillment Bridge and has been republished with permissionm>

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Author: Kais Khadhraoui

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