In Canada customer demands for more rapid and cost-effective eCommerce delivery are increasing daily. Every week I speak with online sellers who, since the dawn of eCommerce, have successfully serviced Canada from one fulfillment operation. Most have fixed national fulfillment operations positioned in Toronto, Montreal, or Vancouver and are currently rethinking this. However, the days are now numbered for one eCommerce fulfillment operation being a viable customer delivery experience solution for Canada.
Implementing a ‘Power of Two’ solution in Canada allows online sellers to reach all major urban markets for next day delivery. Based on a number of recent analyses for clients, these clearly indicate that a Greater Calgary Area and Greater Toronto Area model will provide optimal service, coverage, and cost. Not only does the ‘Power of Two’ allow you to improve service delivery levels, it also delivers several additional benefits such as:
Cost Reduction – Online sellers in the U.S. still servicing Canada from U.S. facilities are in a great position to benefit from the ‘Power of Two’. Not only do you pick up improved service levels, either East or West depending on where you induct into Canada, you also mitigate the risk of being out of business in Canada, should any untoward events or labor issues impact border crossings. It is also important to note that any online seller with more than 50,000 eCommerce deliveries per year in Canada still servicing from a U.S. fulfillment center is paying both cost and service penalties for doing so.
Risk Mitigation – The ‘Power of Two’ mitigates the risk of having a shutdown, strike, or other facility outage which could be fatal in current single site eCommerce fulfillment solutions. With a ‘Power of Two’ solution your Canadian fulfillment operations will have redundancy built in, ensuring you remain in business should a disaster or other disruption strike one of your operations.
Performance Benchmarking – Many online sellers are also currently supporting their eCommerce fulfillment needs with an in-house operation. This is of course perfectly acceptable but the question becomes do you create another in-house operation East or West or look to outsource a second eCommerce site in the East or West as needed. Again, I would assert the ‘Power of Two’ is again at work, by having one in-house site and one outsourced is an effective way to benchmark your business, challenging both your own operations folks and the 3PL to perform at peak levels.
Flexible & Scalable – The ability for in-house or conventional dedicated 3PL operations to be flexible in both volume capabilities and/or locations can be very challenging. Traditional 3PLs charge their clients for depreciation for capital equipment and automation benefits. Often requiring a minimum of a three-year commitment and potential investment buyout clauses, should the agreement not be renewed. Now emerging to serve both eCommerce and stores are unichannel logistics partners with flexible locations, one-year terms, and no charges for depreciation.
Sustainability – ‘Power of Two’ is the entry level for further distributed logistics models, having the ability to drive sales and further reduce transportation costs. This also reduces carbon emissions from your supply chain.
The ‘Power of Two’ is real with rapid results for online and offline sellers in customer delivery service, risk mitigation, flexibility, and cost benchmarking. If you are shipping eCommerce from only one location in Canada or the U.S., you are missing out on service and redundancy benefits. When your CEO challenges you to improve on eCommerce customer experience, know that there is an easy answer, the ‘Power of Two’.