Dealing with last-mile delivery fees can feel like a never-ending battle, especially when these costs eat into your profits. Believe it or not, last-mile delivery fees can make up about 53% of your total shipping costs​. As carriers continue to hike up parcel shipping fees, finding ways to cut these costs is crucial for online sellers.

1. What is Distributed Inventory?

Distributed inventory means storing your products in several warehouses based on where your customers are located and the demand for your products. This setup ensures your products are shipped from the closest warehouse, cutting down on delivery time and costs.

2. The Advantages of Distributed Inventory

a) Reduced Last Mile Delivery Costs

Carriers like FedEx, UPS, and USPS use shipping zones to calculate costs—the higher the zone, the higher the cost. By using multiple warehouses, you can ship from the closest location, lowering the shipping zone and the cost. For example, shipping from a high-cost zone can be reduced to a more affordable zone, potentially saving up to 37% for heavier parcels​.

b) Improved Delivery Efficiency

Distributed inventory not only cuts costs but also speeds up delivery times. With warehouses strategically placed across the country, orders can be shipped from the nearest location, reducing delivery times from 4-5 days to just 1-2 days for most regions .

3. Considerations for Using Distributed Inventory

a) Product Weight

Heavier products benefit the most from distributed inventory due to higher shipping costs over long distances. Products under 15 pounds might not see significant savings.

b) Product Category

Geographic demand varies; for example, swimwear may sell better in coastal areas, so distributing inventory to inland warehouses might not be beneficial.

c) Population Distribution

Urban areas with higher populations are ideal for distributed inventory. Sparse areas with low demand may not require multiple warehouses.

d Headway Freight Costs

Consider the combined cost of initial shipping to multiple warehouses and last-mile delivery. While distributed inventory saves on delivery, it may have higher initial freight costs.

e) Stocking quantity

Distributed inventory is ideal for high-volume sellers. Low-volume sellers might find that the additional warehousing costs outweigh the savings from reduced delivery fees.

4. ShipSage Smart Distribution Technology

ShipSage offers a robust distributed inventory solution with warehouses strategically located across the U.S. Our cloud-based supply chain management system ensures efficient inventory distribution and reduced last-mile delivery fees, saving businesses an average of 36% on costs. With warehouses in California, Pennsylvania, Illinois and Georgia, ShipSage can reach 95% of the U.S. population within two days​.

5. Conclusion

Optimizing last-mile delivery fees is crucial for e-commerce success. Using a distributed inventory model can significantly reduce costs and improve delivery times. Ready to optimize your delivery process? Contact ShipSage today for a free consultation and discover how our distributed inventory model can save you time and money.