Why do companies invest in logistics?
Up until now, it’s typically been because the company is growing and the warehouse is full and we need a new and/or bigger one, or the current warehouse management system is antiquated and will soon no longer be supported, or perhaps even all of the forklifts keep breaking down and we need new ones…
Of course, some more strategic companies invest heavily in a multitude of logistics automation and technology to drive down their logistics costs which savings fall right to the bottom line. I know this, because in my time at Hudson’s Bay Company we did precisely that, one year adding over $25 million to bottom line profits.
But let’s face it most often the ‘Heroes’ in organizations are those who drive sales and increase the top line!
Companies never seem to hesitate when they throw millions into new marketing, advertising, new products, social media campaigns and digital strategies all chasing that Holy Grail of increased sales.
What if I told you that investing more in your logistics can also help you to drive increased sales?
Would you rethink the amount you invest in logistics and fulfillment operations annually if you knew it would ultimately increase your top line sales?
Think most of you would first say REALLY? And then YES! Please tell me more…
To find the proof supporting this linkage between closer to client logistics and increased sales one need look no further than Amazon.
For the last six years, and even before that, Amazon has invested heavily in logistics and during that time frame sales have increased from just over $61 Billion to $178 Billion.
These investments have been in adding 100’s of warehouses as well as robotic automation through the acquisition of Kiva robotics for $700 million; to name just a couple of key logistics investments getting them closer to the customer and at the same time automating to fulfill orders FASTER at LOWER costs.
If you’d like to review the numbers yourself, feel free to compare Amazon’s 2012 logistics operations to where they are at more recently. Just looking at number of warehouses alone, they’ve grown from 80 to over 450, almost 6 times growth and are continuously adding more all the time.
And when you think about it, programs like Prime Memberships are all about logistics because it gives the customer FAST and FREE DELIVERY and now by recently topping 100 million Prime members means that Amazon now has $10 Billion a year to spend on the one key objective that this post is all about.
Moving your fulfillment logistics closer to your customers will drive more sales.
Does this mean the answer is just to sell everything through Amazon? The answer to this is an emphatic NO, as there are several examples now showing how the 100’s of private label brands Amazon continues to introduce faster and more furiously will ultimately co-opt your product sales.
Even if you accept the above premise on getting closer to the customer, each company investing heavily individually in order to establish their own logistics operations closer to all of their US customers is unfortunately not a viable business option for any company.
So are there no other solutions for companies who wish to drive increased sales by getting logistically closer to their customers? The answer is now YES and can be found via MonarchFx, who’s logistics solution business model is simply so compelling that I’ve recently joined the organization.
Feel free to reach out if you’d like to learn more about these unique new and flexible business logistics solutions that will enable companies to further leverage their logistics spend, while at the same time driving more sales by getting closer to their customers.
Vice President, Business Development, MonarchFx email@example.com 919.500.9150