While warehouses have been used for centuries, ecommerce warehouses is a much newer concept.
A large percentage of ecommerce businesses rely on effective warehousing to fuel growth (now and in the future). However, every time your business implements a new inflection point, your ecommerce warehousing becomes more complex. When you’re experiencing growth, a lot of things can happen.
Let’s take a quick look.
- Too Much Stock – You’re going to have too much safety stock – you’ll need somewhere to store it.
- Storage Space – You will eventually run out of your current storage space.
- Lease A Warehouse – You may need to lease a warehouse.
- Build A Warehouse – You may need to build your own warehouse.
- Fulfillment – You may need to invest in fulfillment infrastructure – which includes fulfillment technology, staff, shipping supplies, equipment, etc.
- New Fulfillment Centers – You may need to expand your fulfillment center or purchase a new fulfillment center.
- New Sales Channels – As you grow, you’ll need to reach new customers, which often involves leveraging new sales channels, omni-channel marketing.
- Global Expansion – Your growth may allow you to expand nationally, even internationally.
Look, there’s no single roadmap that gives you a step-by-step solution to fuel your growth. There will be a ton of different variables that go into identifying the right ecommerce warehousing solution for you, as well as finding one that won’t need to be replaced within months (or even years).
To ensure that your business benefits from ecommerce warehousing, it’s important to implement best practices to optimize your supply chain, whether you keep it in-house or work with third-party logistics companies (3PLs) as needed.
In many cases, planning for warehousing and storage is not viewed as a priority and honestly, it should be. Instead, many companies focus on pre-launch activities, not realizing how critical warehousing is outside the obvious storage of products. We’re here to tell you – ecommerce warehousing matters and we’re going to explain exactly what you should doing about it.
What is Ecommerce Warehousing?
Ecommerce warehousing is the storage of physical goods before they are sold online. Warehousing includes safely and securely storing products, as well as tracking where items are located, when they arrived, how long they’ve been in stock, and the quantity on hand at any given time.
What is Ecommerce Warehouse Management?
Ecommerce warehouse management refers to the daily warehouse operations, which include but are not limited to:
- Managing inventory, equipment, and safety
- Training and managing warehouse staff
- Acquiring all required certifications and licensing
- Product and storage security
- Scaling operations as the company grows
- Nurturing and maintaining relationships with shipping carriers
- Forecasting shipping volume
- Forecasting labor demand
- Keeping up with proper safety regulations
- Recording daily inbound and outbound shipments
A lot of time, money, and energy are invested into effective ecommerce warehouse management. Unfortunately, many companies take on warehousing without truly knowing what they’re getting into and by the time they reach out for help, things are a mess. This is exactly why we (1) recommend working with an experienced warehousing provider (2) implement what you learn here.
Types Of Ecommerce Warehouses
There are a number of different ecommerce warehouse options you can choose from, each depending on the exact needs of your business. The best ecommerce warehouses not only have the amenities and expertise to provide the digital fulfillment services needed but also enable brands to store inventory in strategic locations that are physically near their customer base for the quickest and most cost-efficient delivery possible.
(1) Home Warehouse
Many ecommerce businesses start out by storing ecommerce inventory at home (in their living room, basement, garage, office, etc.). This makes sense if your business has a small order volume. If you transform your home into a makeshift ecommerce warehouse, you won’t incur storage charges (though your house may fill up very quickly).
(2) Dropshipping
Dropshipping refers to when the product’s manufacturer controls the whole supply chain, which includes producing, storing, and shipping items. When a customer places an order online, the manufacturer ships the item directly from a factory to the customer, the online merchant is not involved with the fulfillment or shipping process.
While most dropshipping arrangements are done overseas, transit times are known to be extraordinarily long. While this business model is great for trying to find a business concept, the merchant has no inventory control or oversight of the customer experience. That can be a problem.
(3) Fulfillment Center Or Distribution Center
With more features and functionality than your traditional warehouse, a fulfillment center or distribution center is an ecommerce warehouse designed to receive and store your inventory and pick, pack, and ship your orders in the most efficient way possible.
The most common type of fulfillment centers ecommerce businesses outsource fulfillment to are known as a 3PL (Third Party Logistics). These professional fulfillment services handle every aspect of your order fulfillment.
(4) On-Demand Warehousing
Last but not least, we have on-demand warehousing, this allows businesses to rent available storage space for short durations at a time. A majority of these solutions are provided by technology companies that contract warehouses with excess, shared warehouse space to store your inventory.
This model can be great for seasonal sales or events. However, they don’t handle any part of the order fulfillment process themselves, on-demand warehousing is kind of like outsourcing fulfillment to a company that outsources it to others.
Garage And Living Room Ecommerce Warehouses
When you started your online store, you likely weren’t thinking of those things.
For those of you that are growing, now is the time to start thinking about ecommerce warehouse management.
Let’s address the question first. Why are so many merchants using garages and living rooms for warehouse storage?
(1) Their Business Operates At Home
If your whole ecommerce business operates from home, it makes sense to store your products at home as you’re first starting out. For starters, it allows you to keep a close eye on your stock. It allows you to pack and ship orders quickly. It allows you to easily receive inventory and store it. If you’re only making sales here and there, this system can work great. However, if orders are quickly growing, however, you may be finding it more and more difficult to store products.
(2) Don’t Need To Outsource
A lot of business owners don’t consider outsourcing warehousing. In fact, they also feel they’re too small to outsource. They don’t realize that outsourcing to a 3PL warehousing provider is an option. Many of them think warehousing services are for big retailers, but that is not the case.
(3) Warehousing Costs A Lot Of Money
Yes, it’s true, warehousing may costs more than it’s worth in your particular scenario. Some merchants prefer to be all hands on deck as it pertains to control over their warehouse. While that can be beneficial to an extent, if you want to grow, you’re going to need help. If you lease or purchase a warehouse, that can be a big investment, outsourcing may be a better, affordable option for you.
Benefits Of Warehousing Your Ecommerce Products
Warehousing can benefit ecommerce businesses, the size of your business may not matter. Here’s why we recommend warehousing for your products.
(1) Faster Shipping To Customers
Thanks to the Amazon Prime Effect, online shoppers expect to receive orders fast and cost effectively.
When you’re deciding where to store your inventory, you should definitely consider using multiple warehouses across the country. There’s a number of reasons you want to do this. One, if you can put your products closer to your customers, they’re going to receive orders faster. Secondly, if you’re closer to your customers, shipping costs will be less.
2. Optimizing Your Product Storage
Warehouses are specifically designed to store products. Your living room, garage, out building are not.
Ecommerce warehousing can improve the accuracy of inventory tracking and prevent lost items, among other things.
With the right warehouse management system in place, this can help you track inventory turnover rates and proactively reorder inventory.
(3) Save Time
For ecommerce merchants, time is a precious resource. Freeing up the time spent on searching through piles of products or playing storage Tetris allows you to focus instead on growing your business. Oftentimes, the time savings can offset the costs of warehousing; after all, time is money. Having more time to focus on the growth of your ecommerce business is never a bag thing.
(4) A Lot Less Stressful
Ecommerce warehousing is much more just product storage, rather it’s taking the huge list of warehousing responsibilities off your plate. That can be a huge relief for you. You need a great organized fulfillment process and knowing your products are being handled with care can be a huge uplift.
(5) Better Customer Experience
When your customers are receiving their orders fast and accurately, you’re going to see a boost with higher customer experiences. Never underestimate the important of customer service, it will definitely have a positive impact on your bottom line.
What Happens Without Ecommerce Warehouse Management
It doesn’t matter if you store inventory at home or you lease warehouse space, things can go wrong in a hurry if you don’t have proper warehouse and inventory management systems in place. Let’s take a quick look at what can happen when you don’t have proper warehouse management in your business.
(1) Wrong Products Get Shipped
If you’re not watching your inventory close, the wrong products can accidentally go out. If a new customer gets the wrong product, they’re very likely not to purchase from you again.
(2) Running Out Of Products
Many of our clients were small businesses that eventually ran out of space to store inventory. This is a huge bottleneck in your business if this is the case. You always want to make sure you have efficient space to add new products as demand rises. If your home and garage is already packed full, you can miss out on a lot of sales.
(3) Inventory Can Go Missing
One of the key features that makes warehouse management systems great is the fact they keep track of your products. If you don’t have this technology, you know how easy it can be to misplace inventory. Investing in warehouse management can have a positive impact on your bottom line by creating a better customer experience.
4. Stock-Outs And Purchasing Too Much Inventory.
With effective ecommerce warehouse management, you’ll have the ability to figure out how much inventory you have and need. If you have too much inventory, you run the risk of having products that don’t sale. Excess inventory can also lead to spending too much money on storage. If you have too little inventory, you can miss out on sales.
Outsourcing Ecommerce Warehousing And Fulfillment
One way to streamline your ecommerce supply chain — warehousing included — is by outsourcing logistics to a third-party logistics (3PL) provider. Working with a 3PL allows you to automate and manage all of your ecommerce logistics processes through one partner, including warehousing, inventory management, order fulfillment, and more.
Here are some of the benefits of outsourcing ecommerce warehousing and fulfillment to a 3PL.
(1) Super Easy Ecommerce Integrations
Many 3PLs integrate directly with major ecommerce platforms like Shopify, Magento, Ebay, Amazon, or WooCommerce. As soon as an order is placed on your online store, the details sent to your 3PL’s warehouse or fulfillment center. Once submitted, that order is going to be picked, packed, and shipped out to the customer via the warehouse.
By doing so, you’re going to have access to real-time inventory analytics. This connection syncs your online store and 3PL’s software.
Below, you can see a few of the many ecommerce integrations we offer here at Thill Inc.
(2) Tracking Orders
Once your 3PL ships an order, tracking info is pushed back to your ecommerce store and shared with the customer. This helps keep your customers in the loop from the moment they place an order through when it arrives on their doorstep.
(3) Inventory management.
Since 3PL’s store and ship products for you, a 3PL allows you to outsource inventory management. This includes tracking inventory levels, ordering and restocking inventory, and forecasting future demand.
Some 3rd party providers have built-in inventory management software to streamline and automate the process. Inventory management software gives you an upper hand, allowing you to focus on various levels of demand and sales by monitoring trends and analytical patterns.
(4) Faster Order Fulfillment
There’s no question about it, Amazon Prime has shifted expectations, customers now want orders delivered fast and free wherever they shop online. If you’re using a local fulfillment center or shipping from home, fast shipping can get expensive. You only have a few options. (1) You can choose to pass those costs to your customers (2) you’ll have to pay those costs yourself. No matter how you slice it, you don’t win.
Here at Thill Inc., we have multiple warehouse locations throughout the U.S. Why is that important? Well, it can make a big difference in your ability to ship orders quickly and affordably. If you’re able to store inventory in distribution centers closer to your customers, your orders have less distance ( fewer shipping zones) to travel, making shipping faster and more affordable.
(5) Leveraging Major Marketplaces
While many warehouse solutions have ecommerce platforms, some 3PLs can also integrate with major online marketplaces. If you sell on Amazon, eBay, or Walmart, you can automatically sync your orders and inventory. This is super useful if you sell on multiple platforms, store, manage, and track your inventory all through one provider and software.
(6) Scaling As You Grow
As your online store grows and order volumes increase, you’ll going to need more space to store inventory. Furthermore, you’re going to get to the point where you’ll need to hire more staff to manage ecommerce fulfillment. Another perk for working with a 3PL is that it allows you the time and room to grow.
In Closing
Running an online store is both exciting and stressful, but ecommerce warehousing can’t be a back burner type of topic. Instead, it’s a key component of the ecommerce puzzle and can make a huge difference in your success.
Good inventory and warehouse management for your online store can help you save money and time while meeting customer expectations. Whether you store inventory at home, in a garage or partner with a 3PL, take notes of what we’ve discussed today for a better warehousing experience through and through.
