Inventory balancing in Shopify Fulfillment Network
Inventory balancing refers to distributing your products across Shopify Fulfillment Network (SFN) fulfillment centers. When you send inventory to SFN, SFN personnel automatically distribute and store your products close to your customers to enable quick delivery. Inventory balancing enables you to display an accurate delivery promise to most US customers at checkout. The cost of inventory balancing is included in your monthly SFN bill.
SFN uses a forecasting model to determine the best way to distribute your inventory across SFN fulfillment centers. When you join SFN, you're assigned a fulfillment center hub where you send all your inventory. After SFN personnel process your inventory at the fulfillment center hub, your products are distributed across SFN's network of fulfillment centers on an ongoing basis.
Considerations for inventory balancing
Your products are temporarily unavailable to sell while in transit between SFN fulfillment centers. To ensure that customer orders are fulfilled during this time, SFN automatically fulfills new orders using products that are stored in your fulfillment center hub.
Keeping track of these locations is important for tax implications on distributed inventory and where your store has nexus in the United States. Learn more about US Tax Liability.
Preparing your products for best results
Although there's no inventory minimum for using SFN, you need to send SFN enough inventory so that an appropriate amount can be distributed across all SFN fulfillment centers. This distribution across the network enables SFN to provide 2-day delivery to more of your customers. If a specific product's stock levels are too low to support fulfillment from multiple SFN fulfillment centers, then SFN stores the product in fewer locations and limits how often the product is redistributed.
It is recommended to seperate your products into at least 4 boxes for optimal resdistribution. Seperating your products by box allows for the fulfillment center associates to more easily balance your products across multiple zones.
In this example, you as a merchant create an inbound transfer for 2 SKUs and 100 units, or 50 per SKU. You pack your SKUs and units into 5 boxes. Each box contains 2 SKUs and 20 units. Since there are 5 boxes, the fulfillment center hub is able to forward to more fulfillment centers more efficiently, which results in faster inbound receiving time and shorter delivery times.