If you’re manufacturing in China but your customer base is distributed across multiple countries, then a single fulfillment location can become a hindrance to growth in the long run. The import of all the goods from China is easy, but as demand grows in certain areas, it either slows down or becomes costlier.
This is addressed with hybrid fulfillment, which is a combination of China-based fulfillment and fulfillment in local warehouses in markets. It enables brands to localize the inventory close to suppliers and also closer to customers when it makes sense, based on the numbers.
This can help eCommerce businesses that source products from China achieve a balance between speed, cost and stock risk.
What Hybrid Fulfillment Means
Hybrid fulfillment means using more than one fulfillment location or method.
For brands sourcing from China, this usually means:
- A China fulfillment center close to suppliers
- One or more local warehouses in markets such as the US or Europe
- Order routing based on destination, inventory level, shipping cost, and delivery speed
Instead of forcing every order through one warehouse, the brand can choose the most practical fulfillment path for each product and market.
Why Brands Sourcing From China Use Hybrid Fulfillment
For a brand that is just starting to try out the demand, direct shipping from China can work. It helps to prevent the expense of shipping large stock levels to foreign warehouses until sales are certain.
However, as orders from around the world increase, one-location fulfillment can present a problem. Customers in stronger markets can be assured of quicker deliveries. For heavier products or higher volume SKUs, it may also prove to be expensive to ship each package internationally.
Hybrid fulfillment provides the brand with the option to store fast-moving or new or long-tail products in local warehouses and store slower-moving products in China.
This provides a fulfillment strategy for each SKU based on actual demand, as opposed to guesswork.
The Main Benefits
Lower inventory risk.
Brands don’t have to send tons of each SKU to each country. They can hold more stocks in China and transfer only tested products to the warehouses.
Faster delivery where it matters most.
If the markets are strong, one may be able to utilize the local warehouses for delivery, but for small or new markets, delivery from China can still be made.
Better cash flow.
Reduced investment in inventory spread out over multiple locations.
More room to grow.
A brand can begin by only filling orders from China, and over time, start to include local fulfillment when demand increases in certain areas.
More resilience.
Having stock in multiple locations can keep the whole fulfillment process from being impacted if one location has a delay.
What Hybrid Fulfillment Looks Like in Practice
Suppose a brand starts a product production in Shenzhen. All orders are shipped from China in the first few months as demand is not certain.
Several months later, the brand realizes that they are making steady sales in the US each day. Rather than sending all sales across the Pacific Ocean from China, the brand brings part of its huge hit weaves to a US warehouse.
Faster delivery of those products is now to customers in the U.S., and direct delivery to smaller markets is still from China.
In the interim, new product variations remain within China until the brand determines which are worth holding stock of locally.
The fulfillment setup gradually becomes more data-driven. Products are brought nearer to customers only when there is a demand for them, and this demand requires additional storage costs, which are only justifiable if products are selling.
Common Mistakes Brands Make
Splitting inventory too early.
Having a product spread across multiple warehouses before demand is established can result in storage costs with insufficient sales.
Moving every SKU locally.
Some products do not require domestic storage. Best sellers can be closer to customers and slow movers can stay in China.
Using disconnected systems.
Without inventory visibility between the China warehouse and local warehouses, the brand may oversell at one location while stock piles up unused in the other.
Ignoring replenishment time.
There is still a need for replenishing stock in local warehouses. Brands need to consider time to produce, time to ship, customs time, time to receive and put-away time.
Choosing a provider that only handles one side well.
A supplier could be a force in China but a weak force in local warehousing or vice versa. Hybrid fulfillment is best when there is coordination on both sides.
When to Move From China-Only to Hybrid Fulfillment
A brand may be ready for hybrid fulfillment when:
- One market has consistent weekly or daily order volume
- Customers in that market expect faster delivery
- Shipping complaints are increasing
- Paid advertising is driving strong regional demand
- A product has proven sales velocity
- Local storage costs are justified by faster delivery or lower shipping costs
The decision should be based on data, not optimism. A product should move into local storage because demand supports it.
What to Look for in a Hybrid Fulfillment Partner
The ideal partner should support both China-based fulfillment and local warehouse options.
Look for:
- China warehousing near suppliers
- US or EU warehouse options
- Inventory visibility across locations
- Platform integrations
- Kitting and packaging support
- Clear pricing
- Reliable support
- Ability to move products between fulfillment locations as demand changes
NextSmartShip operates on this type of flexible model, with a China-based fulfillment center and other warehousing services in other parts of the world. This enables brands to keep their stock closer to suppliers and also to get inventory closer to customers when required.
FAQ
Is hybrid fulfillment more expensive than China-only fulfillment?
It can be more expensive to store, but it can eliminate delivery friction and enhance fulfillment efficiency in hot markets. This correct answer will vary according to the product margin, volume and customer location.
When should I add a local warehouse?
Try to think about it when one region is consistently requesting and the speed of delivery is becoming a factor in conversion or customer satisfaction.
Should every SKU move into local storage?
No, typically only top sellers or high-priority products should be shipped first. Products that operate at a slower speed or have been experimented with can be kept in China.
Can hybrid fulfillment work for small brands?
Yes, if the provider is flexible with the placement of inventory and the brand begins with a few successful products.
Final Thoughts
Hybrid fulfillment enables brands that source from China to not have to choose between speed and flexibility. Brands can store inventory where it makes the most sense rather than storing all products abroad and/or shipping all orders from China.
A slow and steady methodology is the best. Order from China fulfillment, learn the sales trends and place successful products nearer to the customers while slower performing products nearer to the source.
As your brand expands to international sales, it’s time to consider how to leverage NextSmartShip’s hybrid fulfillment model for China-based fulfillment and local delivery.
