On June 15, Ozon will introduce a new algorithm for a virtual distribution center (VDC). Sellers themselves will determine which items and the quantity thereof they are prepared to supply, and the VDC algorithm will determine the regions where the seller’s supply is lacking and the quantity that is needed.
The calculation will take into account the speed of sales and popularity of the seller’s products in various regions, demand in previous periods and the availability of items at fulfillment centers. At the same time, sellers will have to make only one delivery—Ozon will distribute the items to various warehouses on its own.
Fifty percent of Ozon sellers are already distributing their products by regions, and the introduction of the VDC algorithm will make planning much easier for them, since the system will calculate how much supply is needed in various regions, which will eliminate the need to invest time in additional analytics. The calculation for regions is carried out in such a way that items are stored in warehouses during the free-storage period, and so that sellers do not incur additional costs. All quantities of items that exceed the need in regional warehouses will be stored in central warehouses.
If a seller delivers items without following the recommendations of the algorithm, they will be accepted without fail. According to marketplace data, however, storing items in each new regional warehouse increases sales by an average of 11%, and Ozon will have 19 regional fulfillment centers by the end of 2022. At the same time, the closer a product is to the consumer, the higher it will appear in search results. For customers, the delivery time for goods will be reduced since the items they need will be as near to them as possible. As a result, the number of returns and order cancellations on the site will be even lower since customers will receive their items more quickly.
With the introduction of the VDC, the marketplace will change its fees for supply and logistics, and will abolish its fees for inter-cluster shipping. The cost of supply and logistics will depend only on the volumetric weight of the product in relation to its cost, and there will be no charge for cross-docking.
In addition, the marketplace plans to launch a new project in the third quarter of 2022 whereby it will take returned items back to sellers’ warehouses. This will make it even more convenient for sellers to manage returns.
The calculation will take into account the speed of sales and popularity of the seller’s products in various regions, demand in previous periods and the availability of items at fulfillment centers. At the same time, sellers will have to make only one delivery—Ozon will distribute the items to various warehouses on its own.
Fifty percent of Ozon sellers are already distributing their products by regions, and the introduction of the VDC algorithm will make planning much easier for them, since the system will calculate how much supply is needed in various regions, which will eliminate the need to invest time in additional analytics. The calculation for regions is carried out in such a way that items are stored in warehouses during the free-storage period, and so that sellers do not incur additional costs. All quantities of items that exceed the need in regional warehouses will be stored in central warehouses.
If a seller delivers items without following the recommendations of the algorithm, they will be accepted without fail. According to marketplace data, however, storing items in each new regional warehouse increases sales by an average of 11%, and Ozon will have 19 regional fulfillment centers by the end of 2022. At the same time, the closer a product is to the consumer, the higher it will appear in search results. For customers, the delivery time for goods will be reduced since the items they need will be as near to them as possible. As a result, the number of returns and order cancellations on the site will be even lower since customers will receive their items more quickly.
With the introduction of the VDC, the marketplace will change its fees for supply and logistics, and will abolish its fees for inter-cluster shipping. The cost of supply and logistics will depend only on the volumetric weight of the product in relation to its cost, and there will be no charge for cross-docking.
In addition, the marketplace plans to launch a new project in the third quarter of 2022 whereby it will take returned items back to sellers’ warehouses. This will make it even more convenient for sellers to manage returns.