About Important Things
The eCommerce industry is growing rapidly, as more people start their online businesses and retailers expand their offerings. According to Research and Markets, global eCommerce sales are expected to reach $6.07 trillion by 2024.
As a result, there’s no better time than now to start your own eCommerce business. On the surface, it may appear that all you have to do is create a website and wait for the money to come in. In practice, it’s so much more. As a result, it’s critical to learn as much as possible about the eCommerce business model and to put these techniques into practice as you create your online store.
Running an eCommerce business has some specific requirements that are different from any other type of business. Where to store eCommerce stock and how to successfully manage it: eCommerce warehousing and eCommerce warehouse management are two such requirements that aren’t usually given the attention they deserve.
Some eCommerce businesses use traditional warehouses for storage and traditional warehouse management systems for management, assuming that the operations are identical in both traditional and eCommerce warehouse management. Traditional warehouses and warehouse management systems, while functional, are not designed to meet the unique needs of eCommerce, such as the amount of space and amenities needed, the types and quantities of orders received, and demand fluctuations. Being unprepared for these things can have a negative impact on your productivity, efficiency, and cost you more money than necessary. For this reason, many eCommerce warehouse managers choose to use specific eCommerce warehouses and eCommerce warehouse management systems for their processes instead. In this article, you’ll learn all about this crucial technique, from what it is to the different types of eCommerce warehouses available.
What is ECommerce Warehousing?
eCommerce warehousing refers to the process of storing goods specifically for sale online. Relatedly, eCommerce warehouse management encompasses all the processes involved in operating an eCommerce warehouse, such as:
- Managing the employees who work in the warehouse.
- Keeping track of all the equipment and inventory (raw materials and finished goods) in the warehouse.
- Inventory management, including both raw materials and finished goods (can include a process such as FIFO, first-in, first-out)
- Monitoring all processes from the moment stock arrives in the warehouse until it ships out to a customer
- Building and maintaining relationships with shipping carriers
- Forecasting demand to avoid running out of stock or having too much stock
- Maintaining safety precautions for accident prevention and to protect employees, equipment, and inventory.
Types of eCommerce warehouses?
No two warehouse locations are the same. What works well for the startup business or a traditional brick-and-mortar store won’t be sufficient for major retailers like Walmart. Here are the main types of eCommerce warehouses and everything you need to know about them:
- Public warehouses
- Private warehouses
- Cooperative warehouses
- Government warehouses
- Smart warehouses
- Bonded warehouses
- Consolidated warehouses
Public warehouses
Public warehouses are usually owned by government agencies. The space can be used for personal or professional purposes. Small business owners usually find that this is the most cost-effective way to store inventory for a short period. The fact that these warehouses aren’t the most technologically advanced is a disadvantage.
Private warehouses
Private warehouses are those that are usually owned by larger companies. Wholesalers, distributors, manufacturers, huge retailers, and, in the case of eCommerce, online marketplaces are all examples. Because they are created to suit the owner’s or user’s demands, private warehouses are more expensive to buy or rent than public warehouses. This could include the warehouse’s size, the specific amenities offered (such as an upgraded warehouse management system), or the warehouse’s design for storing specific types of merchandise (for instance, private warehouses near the sea could be built with freezers for seafood storage). The long-term benefits of such a warehouse make it profitable to invest in, making it an ideal choice for e-commerce small businesses, private distributors, and wholesalers.
Cooperative warehouses
Cooperative warehouses are held by a group of companies that are involved in comparable industries or products and, as a result, have similar storage needs. A cooperative warehouse is essentially a private warehouse with multiple owners. Members who operate in slightly different fields but collaborate on a shared project can also use cooperative warehouses. The storage sharing principle extends to the fees paid, with each member simply paying a portion of the total amount. Typically, non-members can also use the warehouse, but for a higher fee. Cooperative warehouses are an excellent option for e-commerce companies that work with other companies.
Government warehouses
Government-owned warehouses are similar to public warehouses, except they are only owned and managed by either the government. These types of warehouses offer affordable rates to businesses. If a business is ever unable to make its rent payment, the government has the authority to recoup the lost revenue by selling the inventory. Also, government-owned warehouses generally provide a lot of security, so they are one of the best choices to store valuable e-commerce products.
Smart warehouses
A smart warehouse uses AI automation to handle storage, management, and fulfillment. The automation goes beyond software like inventory management systems and includes drones and robots to pick and pack the orders for shipment. The robots and drones will also weigh, transport, and store goods. Major eCommerce companies like Alibaba and Amazon use smart warehouses to speed up order fulfillment and reduce error.
Bonded warehouses
Bonded warehouses are another type of government-owned warehouse. They’re specifically meant for importing businesses that need a place to store their products before they’re ready to pay customs duties for them. Typically, businesses are required to pay customs duties for imported goods right after they’re delivered. Storing the products in a bonded warehouse instead gives the owner the advantage of paying only when they remove the goods from the warehouse. Customs authorities, who manage and supervise the warehouse, issue a “bond” when the business begins to rent the warehouse, to serve as government-certified proof that the business is really using that space to store goods. This helps the business avoid any financial losses such as fines, for not paying customs duties right away. Bonded warehouses are perfect for eCommerce businesses that sell internationally.
Consolidated warehouses
Consolidated warehouses are warehouses that collect, combine, and then transport shipments from multiple suppliers, that are all to be delivered to the same city or area. Since most, if not all, of the inventory, would be coming in from other sellers, this type of warehouse does not need to keep large quantities of inventory, which further reduces costs. This low-price tag makes them the perfect option for eCommerce business startups.
What to look for in an eCommerce warehouse space?
No matter what kind of eCommerce warehouse, or inventory management process (be it LIFO, last-in, last out, or something else) you choose for your business, quality warehouses are more than just buildings to store your stuff. As you choose your provider, look for:
- Security and safety, for both your inventory and your employees.
- Trained staff.
- Market proximity and accessibility.
- Adequate storage space with a properly designed interior.
- Latest appliances, equipment, and software.
- Emergency protocols in line with the latest recommendations.
- Highly organized receiving and order picking processes.
- Quality checks.
- Good customer service and prompt delivery.
Conclusion
In all the excitement of running an online store, eCommerce warehousing can get forgotten. But remember good inventory and warehouse management can help you save money and time while meeting customer expectations.
