Storing inventory is an important element to running any business that sells physical goods. Depending on the type of business you have, your storage needs are going to vary. It could be dependent on sales volume, product attributes, or locations sold.
If you own an ecommerce business, you may not be sure what inventory storage system is best for your business. First, you need to weigh out your options; is it going to best to use self-storage, a warehouse or a third-party logistics (3PL) company? That’s the decision you’ll have to make, we’re going to help you make the right decision for your type of business.
We talk about inventory turnover a lot here at Thill, today it’s all about inventory storage. Having an inventory storage system that is cost-effective is going to help you manage your inventory to meet customer expectations, while allowing room for your business to grow.
What Are Inventory Storage Solutions?
Inventory storage solutions are systems that help businesses store, manage, and track inventory. In order to maximize your inventory, you better know where things are, the quantity of each item you have, and where that items needs to go. When you have hundreds.thousands of products, tracking everything can be a huge challenge. The big key to optimal inventory tracking is making sure you have enough space to efficiently store inventory.
There are several different ways to store inventory and properly manage it: self-storage, traditional warehouses, and partnering with a 3PL.
Inventory Storage Solution Types
The inventory storage system you ultimately go with will depend on the size of your business. For those of you that are just getting started, When you are first starting out, you don’t need a big warehouse to store your inventory. Rather, most of you will be able to store inventory at home, such as your garage, basement, or an outside building. For those of you that are established businesses, storing at home is likely not an option. Rather, you’re going to need to store inventory in a warehouse or partner with a fulfillment provider that can help you.
Those 3 options include;
- 3PL Fulfillment
Now, let’s take a look at each one and which is going to be best for your specific scenario.
When you’re first starting your business, you’ll likely focus on self-storage. You likely don’t have the capital to use ecommerce warehousing, you likely don’t have a lot of products also. In this case, you’re going to store your inventory anyway that you can. For example, many ecommerce businesses start out storing inventory in their home garage, Anywhere you can store inventory, you’re going to utilize that, whether that’s a garage, closet, basement, or a small storage facility.
Why You Use Self-Storage
- Affordable Storage – Self-storage is very affordable, even free in a lot of cases.
- Easy To And From – If you’re storing inventory at home, it’s very easy to access.
- Great For Getting Started – When you first start out, you likely won’t need a lot of space.
Why You Don’t Use Self-Storage
- Not An Optimized Process – When you have inventory all over the home, it’s not an optimized process.
- Easy To Misplace – It can be easy to misplace products that are stored all over the home.
- No Room To Grow – If you start selling more products and grow, you’ll quickly run out of room.
As your business starts to grow, you have to begin thinking about scaling up. If you are growing, it will become a big challenge. If you’re fulfilling more orders every month, it’s time to start exploring other storage options.
Storing your products in a warehouse can give you the space you need to grow and scale. Warehousing is utilized by a growing ecommerce business, a company that has consistent sales coming in month after month. It can also be an option for a business that has capital to spend. With warehousing, you’ll pay for a location where you can send your inventory before it gets picked for shipping. This can be in a storage unit, small warehouse, or even purchasing land and building a facility yourself.
Why You Use Warehousing
- Warehousing Has Better Control – It gives you full control over your inventory.
- Next Stage Of Growth – If you’re growing and scaling, it gives you the room to take that next step.
Why You Don’t Use Warehousing
- Warehousing Is Getting Expensive – Logistics warehouse tenants may see as much as a 10 percent hike in 2021.
- You’ll Need Employees – If you have your own warehouse, you’re going to need employees to run it.
- Growth And Scaling – If you’re growing very fast, you could quickly outgrow your space.
- Location – If a warehouse is in a specific location, it could take longer to get orders to customers.
- Equipment – You’ll need to purchase equipment to make sure your warehouse is efficient.
- Big Investment – To purchase a warehouse and get it running, you’re looking at a big investment.
In the grand scheme of things, you’re still responsible for acquiring inventory tracking and other order management tools, certifications, equipment, insurance, shipping supplies, and fix and maintain everything.
Taking traditional warehousing a step further is on-demand warehousing, or a technology platform that helps you find excess warehouse space but doesn’t run any fulfillment centers.
When you outsource fulfillment to a 3PL, you’re able to store your inventory and pick, pack, and ship your direct-to-consumer orders. 3PLs do the work for you and you’re not responsible for running a full-scale operation.
3PLs are inventory and fulfillment experts that have years of experience and the resources available to store your inventory, while managing other aspects of your shipping and retail fulfillment to maximize efficiency and get orders out as soon as possible.
Why You Use A 3PL
- Full Fulfillment Service – The 3PL takes care of all the fulfillment services for you.
- Top Software And Tools – You get to access the 3PLs top tools and software.
- Saving On Shipping Costs – 3PL partners can help you save money on shipping costs.
- Faster Shipping – 3PL companies can get your products to customers faster.
- Secure Products – A 3PL provider often gas inventory warehousing security and safety measurements in place.
- Leverage Experience – Some 3PLs have been in order fulfillment for decades.
- Gain Time Back – Owners can gain a lot of time back by outsourcing their order fulfillment.
- Supply Chain Optimizations – 3PLs can help you with appropriate supply chain optimizations.
Why You Don’t Use A 3PL
- No Full Control – You don’t get full control over your inventory.
- Bigger Investment Needed – 3PL services will be more expensive than doing your own self-fulfillment.
Overall, you don’t have to become a logistics and warehouse management expert, and you get more time back to focus on growing your business rather than dealing with inventory and packing boxes.
What’s The Best Inventory Storage Option For You?
With the examples above, that should give you a good idea of what you should do. There’s a lot of consider when it comes to storing your inventory. With self-storage, warehousing, and 3PLs offering a wide range of benefits and negatives, it can be tough to know which option is the best for you. However, each one of these have a base.
If you’re just getting started, self-fulfillment is likely your first move. If you’re established, growing, and scaling, warehousing and 3PL come into play.
Unlike self-storage and warehousing, storing inventory with a 3PL puts your inventory exactly where it needs to be when shipping to customers. Thus, minimizing steps in your system to get packages out and improves overall efficiency.
3PLs offer leading shipping services and inventory management, while being easy to work with due to their technology and general expertise in all things shipping, inventory and warehousing.
What We Recommend For Your Inventory Storage
What are things to keep in mind with inventory storage? Having worked with thousands of ecommerce businesses, here are four tips and best practices for inventory storage.
(1) Know When To Take That Next Step
You know right now if your inventory storage solution is working or not. At the very least, after reading this, you’re aware of it enough to pay close attention. Still, if your business is growing, it can be tough to know exactly when to take that next step. Follow your gut instinct, use the next step below so you know when to jump to the next solution.
(2) Leverage With Inventory Management And Tracking
In this game, tools and software give you the upper edge, an advantage over your competition.
For those of you that are doing self-storage or warehousing, you can find software and tools that help you manage and track your inventory. There’s tools for both inventory audits and warehouse audits.
While we don’t recommend it, you can still use basic spreadsheets to manage inventory reports, but there’s much better options out there now that we have apps, software, and tools that provide inventory management software. If you’re working with a 3PL like Thill Inc., you get access to these features immediately. It matters, so make sure you’re using it.
(3) Using Reorder Points For SKUs
Reorder points are important, you know that. Reordering inventory will always be a priority for your ecommerce business. You may not know this, but you can automatically set notifications so you know when it’s time to replenish inventory for each SKU – it’s true. Are you using the tools you have access to?
This is why our clients love our software at Thill Inc., you get historical data and help with inventory forecasting.
(4) Inventory Checks Are Key
You have to keep a close eye on your inventory. Inventory checks are a great way of making sure you’re holding enough inventory, you should be doing inventory reconciliation regularly. If you do so, it’s going to help you stay current with your inventory accounting.
(5) Maximizing Your Performance
Efficiency is key to proper inventory storage, tools and software as well.
Ask yourself, are you using all the tools, software, and resources you have at your fingertips to maximize your inventory storage?
If not, make note of everything here and get it into place.
Still Have Questions? Thill Inc Can Help
Having a fulfillment expert on your team is a great asset to hold. We’re proudly one of the top 3PLs for ecommerce merchants. We’re also one of the most experienced, we’ve been doing fulfillment for over 50+ years. With our ecommerce integrations on most major platforms and our state-of-the-art facilities, your inventory is always safe and secure.
Thill Inc. gives you the tools you need for inventory control, order management, and shipping. To save on overall inventory storage costs, partner with the Thill inc. team.
Need a quote? Just click here.