In the US, ecommerce sales have seen an increase of over 50% in the last three years alone, and people are noticing. As more businesses move online, they face higher demand, and with it, the need for a dedicated space to store their products. Online retailers turn to ecommerce warehousing to manage a number of inventory and shipping tasks related to their stock. But how does it all work? In this article, we’ll cover the basics of ecommerce warehousing so you’ll know what to expect and how to choose the right one for your business.
Types of ecommerce warehouses
An ecommerce warehouse is different from a traditional warehouse because it is dedicated to storing only ecommerce inventory and requires a different management strategy, which could vary depending on the type of ecommerce warehouse you choose. To figure out which one is right for your business, start by familiarizing yourself with what each type has to offer.
- Public warehouses. These are owned by governmental bodies and lent for business and personal use. Best for short-term affordable storage.
- Private warehouses. Privately owned and usually used by large online marketplaces, these warehouses typically cost more than public options but can still be a good choice for startups. Best for long-term strategic distribution.
- Bonded warehouses. These cater to sellers who need to store imported goods duty-free until purchased. Usually very secure, bonded warehouses are best for cross-border ecommerce businesses and extended storage time.
- Consolidated warehouses. Shipments from different suppliers that are all headed to the same general location get grouped together into larger shipments in these warehouses before being distributed. One of the most economical options, consolidated warehouses are best for new startups and small businesses.
- Smart warehouses. The entire storage and distribution process is automated by AI and carried out by drones and various robots. Best if you want things done efficiently without the need for warehouse management.
- Cooperative warehouses. While these do offer storage for those outside the co-op, members will benefit from reduced rates. Best for cooperative organizations.
- Government warehouses. Offering much in the way of security, these also tend to be fairly affordable. Best for safe storage of valuable goods.
What to look for in an ecommerce warehouse
Different businesses have different needs, and those needs can be fluid as your business grows and evolves. The needs of one business may focus on the type of merchandise they need to store, while another may prioritize strategic locationing. When deciding which ecommerce warehouse best suits the specific needs of your business, you need an option that fits within your budget. You’ll also want to consider how that option fits within the supply chain, as well as how it serves the needs of your target market.
What is ecommerce warehouse management?
Ecommerce warehouse management encompasses all of the daily warehouse operations, such as monitoring inventory at all points from arrival to shipment, as well as building and maintaining relationships with shipping carriers. Things like training staff, managing employees, and maintaining safety precautions are all covered by warehouse management. Management can also forecast demand to help you avoid overstocking or out-of-stock products. A lot of effort goes into managing these processes which is just one reason so many ecommerce businesses seek to outsource fulfillment.
How ecommerce warehouse management helps
Because ecommerce comes with its own unique needs regarding things like orders and returns, you’ll want a management system designed specifically to handle the demands of an ecommerce business. For example, unlike traditional warehouses that are set up to fulfill orders containing several products, around 80% of ecommerce orders contain just one product, and need a warehouse system designed to fulfill these large numbers of single-item orders. An ecommerce warehouse management system can even deal with demand fluctuations and provide a server to handle increased customer traffic on your website during rises in seasonal shopping.
Along with accurate management of inventory which is reflected on your website, an ecommerce WMS is designed to handle the larger numbers of returns that ecommerce businesses tend to see compared to traditional warehouses. The return process on one order alone has many steps and needs to be executed in the right order at the right time, and an ecommerce warehouse management system can handle a high volume of returns simultaneously.
Ecommerce warehouse management best practices
To make the most of your ecommerce warehouse management system, consider some of these best practices.
- Be sure to integrate your ecommerce store with the WMS and any tools that can help automate important tasks like restocking items and sending order updates and shipping notifications to customers.
- You may also choose to distribute your products across multiple warehouse locations in the country in order to get orders to customers faster.
- Estimating needed inventory can be difficult for new businesses since you don’t have any data to base it on, so be sure to set inventory minimums. The WMS will automatically place an order to restock once inventory reaches a certain level.
- The auto-generated picking lists and batch-picking that 3PL fulfillment centers offer can prove incredibly helpful. There are tons of options to choose from, so you’ll want to do some research on picking systems and try multiple systems out to find the right fit for your business, and one that you can grow and scale.
Benefits of Ecommerce Warehousing
For businesses that are ready to outsource storage and order processing, investing in an ecommerce warehouse comes with a long list of benefits. Probably the most valuable one is time. Not only can it ensure quick delivery to customers, but it can also save you the time of shipping order after order yourself. A good ecommerce WMS will also help keep you organized with accurate reports on your large inventory. All those tasks and processes associated with managing orders and inventory no longer fall on you alone. Instead, they’re automated by the management system, giving you back valuable time and energy so you can stop stressing about stock and focus on other important parts of growing your business.
Ecommerce warehousing with 3PL
Third-party logistics (3PL) providers are a great option if you want to manage all logistics processes like warehousing, inventory management, and order fulfillment all through one partner. A 3PL can integrate with major ecommerce platforms and pass on all details from orders directly to the 3PL’s warehouse. You can even automatically sync your orders and inventory on major marketplaces like Amazon and eBay through a 3PL.
In addition to covering all aspects of inventory management for you, a 3PL handles shipment information as well, such as providing order tracking for customers through your ecommerce store. 3PL ecommerce warehouses provide quick fulfillment on orders thanks to multiple warehouse locations, which also makes shipping orders more affordable. Ultimately, when choosing a 3PL, you’ll want to pick one that not only fits the unique needs of your ecommerce store but also one that can scale with your business as it grows.
The bottom line
Ecommerce warehousing is just one part of the supply chain, but it’s an important one. Whether you’re managing warehouse operations yourself or outsourcing to a 3PL, having a reliable order fulfillment process contributes to a great customer experience. From accurate inventory on your ecommerce store to fast delivery and easy returns, warehousing can make a huge impact on customer relationships and help your business continue to grow.