Tuesday, October 30, 2007

Once you know, You Newegg! (Warehousing)

Being a computer hardware enthusiast I have been a longtime supporter of Newegg for their great selection and fantastic service levels for all things technology. Additionally, you don't see too many companies opening their doors for warehouse tours, and from both my experience as a customer and the Newegg Warehouse Tour reported by Anandtech the organization looks as solid as my service has been consistent.

Newegg is focused on high customer service levels, and it can be seen by their quick warehouse picking, operational flexibility, and many shipping methods. I truly appreciate the newegg option to make the order a Rush order by paying a few additional dollars .... Many retailers only give buyers the option to shorten their order leadtime by changing shipping methods, which gets expensive very quickly when you go from ground shipping to airfreight (usually at least 2x the cost).

The other problematic issue with shipping being the only user controlled variable is that I have purchased items (from other vendors) in the past that I upgraded to Fedex 2day shipping only to have the order take so long to pick that the order pushed out beyond the weekend anyway! I really wanted my order before the weekend for a computer build, so if I had known that the order would take forever to pick, stage, and package then I would have just saved the money and waited the additional week. Therefore, I find the Rush order option to be perfect for many people who need additional expediting control; it also allows Newegg to offer a service level somewhere between the cost of ground and 2nd day Air. This pricing point is a price many people are more than willing to pay, and Newegg earns the additional money rather than passing it on to the shippers!


Newegg's operations look very consistent with other warehouses I have visited (random item locations powered by a picking system, pick to light (PTL) conveyors with totes, manual and automatic boxing, etc.), but if you spent time really looking at the detailed processes I bet you might find a few innovative things that give Newegg a competitive advantage. The reason I believe this to be the case is that Newegg runs a very powerful, organized website and many of their products are high value, yet are also low weight. Newegg runs warehouses in CA and TN, so that gives them good access to both the east coast and west coast markets with adequate service to the middle of the country. The article mentions Newegg's target delivery goal twice, and I think it is an admirable one.
"Newegg's goal is to be able to have your shipment to you within 2 days of ordering it regardless of shipping method. It's not a guarantee, but rather an internal goal that they've been striving for ever since their inception. "

"We put great effort into building a bulletproof infrastructure because we are committed to ensuring our customers have the best service. Sure, you can find smaller companies that may be a dollar or so cheaper, but at Newegg we decided we wanted to give our customer the best experience every time, and that is why we must invest into advanced systems that other companies do not have. We built all this with the customer specifically in mind."

-Howard Tong, former Newegg VP

1 comment:

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