In Canada, customer demands for more rapid and cost-effective e-commerce delivery are increasing on a daily basis. Online sellers, since the dawn of e-commerce, 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 e-commerce 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 e-commerce deliveries per year in Canada still servicing from a U.S. fulfillment center are 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 e-commerce 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 e-commerce 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 e-commerce 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.
Flexibility and scalability. 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, and they almost always require a minimum of three-year commitments and potential investment buyout clauses, should the agreement not be renewed. Now emerging to serve both e-commerce and stores are uni-channel 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 e-commerce from only one location in Canada or the U.S., you are missing out on service and redundancy benefits.
Jeff Ashcroft is vice president and general manager of MonarchFx Canada.
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