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Add third fulfillment center

Adding a third FC is important because the ability to offer 2-day shipping (or profitable free shipping) goes from roughly 60%-80% of the population to 80%-90%. Adding that third FC to the middle part of the country is the last step before marginal returns kicks in with regards to population coverage. A fourth, fifth, etc., FC has diminishing returns where the benefit is only found with true scale (think millions of shipments per month).

The good news is going from two to three FCs is easier than prior expansion. Many of the "in the building" processes and technologies that needed to be pluralized across two FCs can be applied to the third.

The difficulty comes with adding a third node to the network. Updating decisions like "Which FC should we ship from?", "Do we do a split shipment?", and "Where should we allocate this new inventory?" become exponentially harder.

  • $500M annual online sales
  • 1,00,000 monthly shipments
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