Traditionally retail has placed priority on inventory ownership when processing orders. If you own a lot of inventory it makes sense to try to sell that first.
While this approach works for pure brick and mortar retail, it isn’t as feasible with ecommerce. Focusing on inventory ownership reduces online assortment depth and breadth, harms the customer experience with increased shipping times and costs, and can actually compound inventory and supply chain risk.
Instead of ownership, we recommend prioritizing inventory by location for ecommerce orders. When an order comes through a retailer’s or brand’s online storefront, the order should be processed by the inventory entity closest to the customer.
Placing a higher priority on location will turn your ecommerce operation into a truly customer-centric organization. The focus will be on offering a wide assortment of items that can be shipped to customers in the fastest, most cost-effective manner possible. And with happier customers will come higher revenue, faster growth, and even more investment into expanding your omnichannel capabilities.
PS: Prioritizing location over ownership will also allow your supply chain to quickly respond to the kinds of disruptions we’re currently facing. If, for example, your FCs are unable to ship a particular item, you can just reroute to a local store, trading partner, 3PL, or distributor to get the customer what they need as quickly as possible. Kind of awesome actually.