Customer Geographic Distribution Patterns

In a recent survey, we discovered a startling trend in which many online merchants cannot name the most common states their orders are shipped to.

From initial marketing to the time your product arrives at the customer’s door, the location of your customer can determine a lot about the resulting interaction during the sales process.

Aside from your initial marketing or public relations messaging, customer location can also dictate perception of your shipping rates and shipping methods. Location can also play a vital role in setting delivery expectations. Every step along the way is an opportunity to gain or lose sales. Recognizing the location(s) of your customer base will always give you an advantage.

So, where are your customers located? If you cannot name the top five most common states your customers reside in, you are not alone. Most managers and executives cannot answer this question with much confidence.

In truth, most online merchants see very similar trends in terms of customer location, regardless of the type of product they sell. Here are three different mapped examples of customer locations based on actual Rush Order client data. Each dark blue dot on the map represents the destination of an order shipped during a recent time period.

Notice that the vast majority of orders are clustered on the East and West Coasts. While several orders are sprinkled throughout the Midwest, the overall distribution is heavily weighted to the coastal population centers.

If you are interested in generating a map of your order destinations like those displayed below, simply email Rush Order and attach a spreadsheet that includes the destination zip code of each order you shipped. Or, call me at (800) 522-5939. I will also include a report of cumulative order quantity by state.

Results from a Book Publisher:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, Washington DC, and coastal areas of the Florida peninsula.

Results from a Software Manufacturer:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, and Washington DC.

Results from a Consumer Electronics Manufacturer:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, and Washington DC.

When mapping customer locations, the pattern is remarkable. It is even more remarkable that our 20+ years of observations of direct sales patterns across many product categories have remained surprisingly constant.

The only instable part of this story is the general supply chain flow. Traditionally, a much larger percentage of products were manufactured in the Midwest. As such, locating order fulfillment in the Midwest made perfect sense. Product flowed into the fulfillment center (red arrows) from nearby manufacturing sites. Product then flowed out to customers near the coasts (black arrows).

Today, most products arrive from overseas manufacturers. The intuitive and cost saving approach is for product to flow into the fulfillment center (red arrows) from overseas manufacturing sites. Product then flows out to customers near the coasts (black arrows).

The ability to store inventory and fulfill orders within a close proximity to the East and West Coasts holds the following advantages:

• Cheaper shipping from the manufacturing site to your door (specifically from the port of entry to your door)
• Shorter time in transit from the manufacturing site to your door
• Cheaper shipping from your door to the customer’s door
• Faster delivery to your customer’s door, thereby cutting customer service costs and increasing overall customer satisfaction.

The result is a dramatic time and cost savings throughout the supply chain.

Even if your product is not manufactured overseas, a coastal fulfillment operation may still make terrific sense. Not only do you still leverage the cheaper rates and shorter lead times when shipping to your customers, you are already setup for future growth that would allow you to source manufacturing overseas.