If you’re in the market for a new e-commerce warehouse, it can be tough to know where to start. With so many options available, how do you find the right one for your business? In this blog post, we will share our top tips for finding an e-commerce warehouse that meets your needs. Read on to learn more!
The first consideration you should make when selecting an e-commerce warehouse is its location. When choosing a warehouse for ecommerce brands, location is essential. You’ll be able to fulfill orders more quickly and pay less for delivery.
Key Takeaways
- Before you start looking for a warehouse, it’s important to decide exactly what your needs are. Figure out what kind of inventory management it has and if you need to store and how much space will be required. Knowing this information ahead of time can help narrow down your choices and save you time in the long run.
- Take the time to research different e-commerce warehouses and compare their features, prices, and locations. Look at reviews from previous customers to see what they liked or disliked about a particular warehouse.
- Once you have narrowed down your choices, arrange a visit to each one so that you can get a better feel for the facility.
Table of Contents
Introduction
The success of an online business often hinges on its ability to locate an appropriate e-commerce warehouse. Many considerations, such as inventory, location, and cost, should be considered while deciding on the optimal warehouse layout. Different types of warehouses are available to meet a wide range of requirements.
There are seven common types of warehouses:
- Distribution center
- Public warehouse
- Private warehouse
- Bonded warehouse
- Climate-controlled warehouse
- Smart warehouse
- Consolidated warehouse
Warehouses that function as distribution centers often have more square footage than any other type of warehouse. These hubs facilitate the rapid transfer of massive amounts of goods. Products are promptly transported from different vendors to numerous buyers.
These hubs are crucial to the functioning of the supply chain because of the rapid and dependable circulation of commodities they facilitate. These facilities are usually computer-controlled, which results in increased productivity. These hubs are typically situated in close proximity to transportation hubs in an effort to maximize efficiency and minimize delivery times.
When it comes to perishable items, the distribution center typically stores them for no more than a day before sending them out to clients.
Government and quasi-government organizations often maintain public storage facilities. Companies in the private sector pay rent to use them as a temporary warehouse while they stock up on supplies.
Good for businesses that don’t yet have the capital to invest in a warehouse but need temporary storage for products, such as online retailers just getting their feet wet. While saving up for a second warehouse, small enterprises can temporarily store their excess inventory at this facility.
Private warehouse
Private warehouses are storage facilities that large retailers, wholesalers, manufacturers, or distributors rent out for their own use. Major e-commerce platforms also rely on private warehouses to stock their sites with goods.
During the busy season, private businesses stock up on products in preparation for the inevitable influx of orders by buying in bulk and storing them in a warehouse.
Investments in the capital are necessary for private warehousing, often called proprietary warehousing. As a result, only established businesses should consider it. The initial outlay is necessary, but the payoff is substantial.
Most bonded warehouses are operated by the government or private companies. As the corporations whose goods are being stored in these warehouses do not have to pay any duty costs until their commodities are released, they are used to store imported goods before customs duties are collected.
Before entering the market, private companies that manage bonded warehouses must first get a license from the government. The government may count on timely tax payments from importers by using this system. Nobody can sell their goods on the open market if the importer hasn’t paid the duties.
Importers greatly benefit from bonded warehouses because their goods can be stored there duty-free for extended periods of time. Such storage facilities can’t be beaten for online retailers engaging in worldwide trade.
Warehouses are not particularly lagging when it comes to automation these days. For the purposes of inventory management and order fulfillment, smart warehouses employ AI technology. From storing products in warehouses to delivering them to customers, the entire process is automated.
Because they use cutting-edge automation systems, these warehouses need minimal human oversight. Amazon and Alibaba, two of the biggest names in online retail, are big fans of the benefits that smart warehouses may offer.
A consolidation warehouse is a third-party storage facility that collects small shipments from multiple suppliers and packs them into one larger shipment that may then be transported by a single, more cost-effective truckload.
It is a convenient option for new businesses that do not yet have a sizable inventory to store.
Such storage facilities are used for warehousing perishable goods and other products that require controlled temperatures. Humidity-controlled facilities for storing fresh fruits, flowers, and other perishables, and freezers for storing frozen meals are only two examples of what kinds of goods can be stored in climate-controlled warehouses.
Considerations for choosing a warehouse for E-commerce
Here are some of the most common considerations when choosing a warehouse:
Location
Location is a major consideration when choosing a warehouse. The location of your warehouse is going to affect the shipping costs of your products and how quickly they can be delivered to your customers. If you choose a location that is too far away from where many of your customers live, then your shipping costs will be higher than if you had chosen a location closer to where most of your customers are located.
Also, when choosing a warehouse you should consider how close it is to any other warehouses or distribution centers that might supply you with the product. If you have several warehouses and distribution centers in different areas, it can help reduce shipping costs for you because it reduces the distance between each point of delivery within your company.
Size
When it comes to picking a warehouse for your E-commerce company, size matters. You want to make sure that the warehouse you select is the right size for your business’s needs, both now and in the future. Your current storage requirements should be taken into account as well as any potential growth you anticipate for your company.
If you’re just starting out and don’t have many products, it may make sense to go with a smaller warehouse at first, then expand as you grow. On the other hand, if you’re planning on keeping your business small-scale but don’t want to limit yourself by choosing a smaller space for storing all of your inventory, then look for a larger warehouse that has plenty of room for expansion down the road when needed–without having to worry about running out of space!
Cost
The cost of warehouse space can vary widely depending on many factors, including the location, size, and amenities of the warehouse.
The location of the warehouse will have a major impact on its cost. In general, warehouses located closer to large population centers tend to cost more than ones located in areas with less population density. This is because there are more transportation options available in areas with more people, which means that goods can be shipped more easily to customers.
Warehouses also vary in size and amenities. Some warehouses offer more storage space than others, while others may offer additional services such as loading docks or forklift access. These considerations can contribute to how much warehouse costs to use.
Types of warehouses
Fulfillment centers
An order fulfillment center is a warehouse that processes and ships customer orders.
Orders can vary widely in terms of magnitude, complexity, and who places them. Many distribution centers also process returned orders in addition to sending outgoing shipments.
Here are some of the pros:
Attend to your fundamental skills.
If you outsource your order fulfillment, your business will have more time to concentrate on its core competencies, which may include product development, advertising, or strategic planning. Even if you have qualified warehouse supervisors, the fulfillment operation will consume the time of upper management, taking them away from other productive tasks if you choose to handle it in-house.
Reduce your operating expenses.
There will be ongoing expenses, such as warehouse rent, equipment, and indirect labor, associated with handling order fulfillment in-house. Depending on the fixed costs involved, the cost per order may fluctuate as order volume changes. If a fulfillment center doesn’t have minimums or a large monthly fee, most merchants can enjoy more of a flexible cost model while outsourcing their order fulfillment.
Take steps to reduce delivery expenses.
Many online retailers may save money on delivery by outsourcing order fulfillment rather than paying for it themselves. This is because the fulfillment center often has better shipping rates than the individual merchant can secure. The company may also have more than one warehouse since it can save money on transportation costs by stocking items closer to its clientele if demand for a given product warrants separating inventory into various locations.
Get faster and more dependable results.
Sales, inventory replenishment, customer returns, and other facets of an online store’s business are all susceptible to ups and downs. Because of this, it may be difficult to efficiently manage your fulfillment team in-house while yet ensuring rapid and consistent service in every respect. By using a fulfillment service, you can offload these concerns onto someone else. Many distribution centers excel in handling fluctuations in order volume, allowing them to keep your turnaround times low and your per-order costs stable even when your business experiences growth and contraction.
Raise your capacity to expand.
Warehouse space may become an issue as your business expands. You shouldn’t have to worry about this with a fulfillment partner, but it’s still a good idea to verify their overall capacity and their ability to scale it up.
Here are some of the cons:
Decline in command
Although it may be convenient to have a fulfillment center so close to their office, some online store owners find it difficult to let go of control. Knowing that not all of your requests can be fulfilled is essential, as is having faith in your fulfillment partner and doing your research to make sure it’s a reliable, solvent business.
Shortcomings in personalization
It’s not unusual for retailers to want to trademark their packaging, packing materials, or even the letter they send with the order to the customer. Some of this personalization may need to be given up in order to save money through outsourcing, which could be beneficial if the savings are then passed on to customers.
The risk of increased expenditures
As I mentioned before, using a fulfillment facility that is located outside of the country can help certain sellers save money. However, there are situations in which the total cost for the seller goes substantially, based on their volume and their needs. Overall, this may still be beneficial for their organization because they have improved their service to customers, increased their scalability, decreased errors, and gained more time to focus on their core competencies.
Public warehouses
For ecommerce businesses with goods in need of secure storage from month to month, look no further than the public warehouse. With fees tailored according to each company’s needs, managing inventory becomes easy and cost-effective. Not only do external warehousing companies offer detailed reports on stock levels and shipment capabilities, but they offer a variety of bin sizes perfect for ecommerce product fulfillment. Whether your ecommerce business is large or small, a public warehouse can help you stay organized and on budget while still providing dependable service.
Here are some of the pros:
Investment Costs for Warehousing Are Null and Void
One key perk of choosing a third-party logistics provider is avoiding the initial outlay of capital required to set up a warehouse of one’s own. Public storage expenses are a form of overhead, and they can fluctuate widely.
The Ability to Reach a Wider Market:
Public storage is an efficient and cost-effective way for growing businesses to enter new markets.
Account for seasonal variation:
With public w/h, there is no need to make a long-term financial commitment, so even if a company’s operations are seasonal, it can still rent as much space as needed at the busiest times of the year. The ability to have storage costs scale directly with volume is another major benefit.
Lower Potential Loss (Lower Opportunity Cost):
Since no money is locked down when using public w/h, the user company can easily migrate to another facility, usually within 30 days. In addition, the user company can quickly relocate to a new warehouse if it finds a more favorable location, one that offers, for example, a lower rent.
Allow for more cost-effective shipping:
This benefit alone could account for as much as half of the case for public storage facilities in use today. The fact that they serve the needs of numerous businesses means that they ship at a high enough volume to qualify for discounted consolidated freight rates without incurring the substantially higher freight costs that come with exporting smaller quantities at premium rates.
Pros and cons of each type of warehouse
Here are some of the cons:
Poor adaptability
The main issue is that it is excessively pricey due to its set size and expenditures. As a result, the private facility will be unable to respond quickly to fluctuations in demand by increasing or decreasing capacity. Thus, the company still bears the fixed expenses and the poorer productivity associated with underutilized warehouse space even in times of low demand. The firm’s ability to rent out some of its space, though, can mitigate some of the negatives. The strategic placement choices available to it are also reduced. Because of their inability to adapt rapidly to shifts in market size, geography, and consumer demand, they risk missing out on a lucrative opportunity.
Possibility of loss of considerable proportions (high risk)
If the money can be invested elsewhere, it may yield a higher return. On top of that, the w/unique h’s construction raises the possibility that it won’t be resold at a later date.
Discouragingly low rates of return
Most businesses find a mix of public and private warehousing to be most cost-effective because the return is comparable to their other investments. In markets where the volume warrants ownership, private warehousing is the greatest option for handling the little inventory needed for the most efficient logistics. However, in times of high demand, when private storage facilities are at capacity, the surplus can be temporarily housed in a public warehouse.
Private warehouses
This form of the warehouse is owned and operated by a corporation, but is also involved in other areas of distribution. For example, major retail companies owning multiple regional warehouses that provide outlets with supplies or wholesalers operating a warehouse for purchasing and delivering goods are just some examples.
Here are some of the pros:
Full-control
The owner has complete discretion over day-to-day operations and can make pivotal choices with little to no input from other stakeholders.
Appropriate for your purposes
Organizations can customize the warehouse to their exact specifications.
Featuring a unique set of amenities
Possessing amenities not always found in public storage facilities, allows for the specialized treatment, storage, and security of assets.
Here are some of the cons:
Quite a bit of money is required
Construction costs for a warehouse might be quite significant at the outset.
Weak management
They may not have access to skilled management professionals, putting them at a disadvantage when confronting organizational issues. Additionally, Staff and resources may be underutilized during periods of low volume.
Highly inflexible
It is difficult to immediately adjust the capacity of a private facility and expand or diminish it as needed. As a result, companies might be stuck with higher expenses and lower productivity because of underutilized space.
Finding a warehouse
How to determine which one is the best fit for your business
Finding the right warehouse space for your business can be a tricky task, especially if you’re new to the world of warehousing. But fret not—we’ve got you covered with our tips for finding the best warehouse for your needs.
Picking out the right warehouse space is important because it’s where your business is going to store and distribute its products. This is where all of your hard work comes together, so it’s important that you get it right.
When choosing a warehouse, here are some things to keep in mind:
Location: Is it located near other warehouses? How close are they? What kind of traffic does it have? How far away are other businesses in the area?
Size: How much space do you need? Do you need enough room for expansion? Will there be enough room for extra equipment like forklifts or pallet jacks? Does it have any parking or loading docks nearby? Does it have power sources available onsite? If not, will they be able to install them at an affordable cost?
Accessibility: What kind of access do they have? Are there multiple entrances/exits throughout the day so trucks can come in and out without any delays? Are there guards present to monitor the area? Is it easily accessible to people with mobility issues or who need special assistance?
Security: Does the warehouse have CCTV cameras in place for monitoring and security purposes? Do they have a system for tracking inventory coming and going from the facility? What kind of safety protocols are in place in case of an emergency?
Once you find the right warehouse for your business, you can be sure that your products will be well taken care of and ready to go out when needed. With the right warehouse space, your business can look forward to long-term success!
Ways to find a Warehouse
1. Online
If you’re looking for a warehouse, you can start by searching online. You can use search engines like Google or Yahoo to find warehouses in your area, or you can go straight to the source: the website of the warehouse itself.
2. Brokers
If you’re looking for a warehouse, you can also contact a broker. Brokers specialize in commercial real estate and may be able to help you find the perfect space for your business. They can also help with other aspects of the buying process, including negotiating leases, financing, and planning renovations.
3. Self-searching
Self-searching is a great way to find a warehouse. You can search through the internet, or look in your local paper. Talk to people in the industry and ask them if they know of any warehouses for sale.
If you are looking for a warehouse with specific features, such as a certain type of freight door or storage space, you can search for that as well. The more specific you can be when searching, the better chance you have of finding what you are looking for.
If you want some tips on how to make the most of your warehouse space, this article I wrote will help you get started.
Key Things to Look for in a Good Ecommerce Warehouse
1. Space Size
It’s important to choose a warehouse that has enough space for your business to grow. If you’re planning on increasing your inventory, you will need more space. You also need to consider how much space you will require for storage and what type of products you are selling.
2. Location
Location is key when choosing where to locate your ecommerce business warehouse. The location should be close to your customers and suppliers, and it should be large enough to accommodate the amount of inventory you need to store. It’s also important to consider how accessible the location is for employees and delivery drivers because it can impact how quickly orders are processed.
3. Layout & Building Features
We’ve got a few tips for you to help you figure out what to look for in ecommerce warehousing.
First, it’s important to know that warehouse layout should be a factor in your decision—and it is worth considering. The layout of your warehouse should match the way you want your business to operate. Ecommerce warehouse management systems are often designed with different layouts for different purposes. For example, some warehouses have product storage on one side and shipping on the other; other warehouses have everything in one place. These differences can affect the speed and efficiency of your operation.
4. Rent Rate
If you’re looking to buy a warehouse, it’s important to consider the rent rate. If you don’t know what this means, it’s essentially how much you have to pay each month to use the space. A good rule of thumb is to look at what kind of space you need and then search for warehouses with similar features in the same area. You can also ask your seller if they know any other businesses that rent out warehouses in the area.
Rent rates vary depending on location, size, amenities, and more!
5. Lease Terms
If you’re looking to buy a warehouse, it’s important to consider the lease terms. You may want one that has the option to purchase as this will give you more control over your property and allow for an investment opportunity down the road.
6. Amenities
Amenities are a big deal when you’re choosing an ecommerce store. You want to be able to get your products shipped to you as quickly as possible, and the best way to do that is with a warehouse that has all of the amenities necessary for fast shipping.
Some of these amenities include:
- A loading dock
- A secured parking lot
- A forklift if needed
- A postage machine
- A camera system so you know what’s going on at all times
How to negotiate the best terms and price for a warehouse lease
Warehouse leases can be long and complicated, so it’s important to know how to negotiate the best terms and price for your business, here are what you should do:
Evaluate your business needs
Before you start negotiating a lease, it’s important to evaluate your business needs. The more you know about what you need in a warehouse, the better equipped you’ll be to get what you want out of the deal.
Understand your costs
When you’re negotiating a warehouse lease, you should know your costs. This includes rent, utilities, and any other expenses that may be associated with the space. You can use this information to negotiate the best possible deal for your business. For example, if you have several warehouses in mind but one of them is more expensive than the others, take that into consideration when negotiating a lease rate.
Check market rents
The market rent is the going rate for commercial spaces in your area. You can check what other businesses are paying for their warehouse space by using a commercial real estates database like CoStar or LoopNet. This will give you an idea of what similar properties in your area are being leased for and how much you should expect to pay for yours.
Research the property
You should also do your homework on the property itself. Check to see if there are any outstanding building codes or violations, as well as any legal issues that might prevent you from leasing the space (like a pending lawsuit). If possible, contact other tenants in the building and get their thoughts on the landlord’s management style.
Don’t be quick to sign
The most important thing to remember when leasing a commercial property is not to be quick to sign. Before you sign anything, make sure that you have a full understanding of all the terms and conditions in the lease agreement. If there are any provisions that you don’t understand or that seem unfair or unfavorable, get them clarified before signing on the dotted line. Also, make sure that everything has been spelled out clearly so there are no surprises later down the road.
Finding eCommerce Warehouse FAQs
Why is it so hard to find warehouse space?
Warehouse space is in short supply as a result of the increasing demand for online goods and the consequent bottlenecking of the supply chain. This is how a few people are managing. Many businesses have experienced difficulties obtaining necessary supplies because of the current strain on the supply chain. They now face the challenge of trying to identify a suitable location for it.
How do you organize an e-commerce warehouse?
Organizing an e-commerce warehouse requires careful planning and strategic execution. The first step is to determine what items need to be stored in the warehouse and how much space each item requires. This will help you decide on the size of the warehouse and its layout. Once you have determined this, it’s important to consider how products will flow through the warehouse, from receiving to shipping. You’ll need to identify storage locations for each item and consider how items will be retrieved and tracked. Finally, you should invest in an inventory management system so that you can easily monitor your stock levels and stay organized.
How do you measure the performance of a warehouse?
Ensuring multiple warehouses are operating efficiently is a great way to reduce costs and increase profit margins. To gauge warehouse efficiency, multiple techniques can be employed such as financial statement analysis, performance appraisals, and the application of key performance indicators (KPIs). These methods provide insight into how well each warehouse is functioning in terms of cost management, employee productivity, and inventory accuracy. By employing multiple strategies to measure efficiency, businesses can generate actionable insights that help to optimize operations and make warehouses more profitable.
How can I increase my warehouse speed?
Ecommerce businesses must keep pace with ever-growing speed goals. To this end, improving warehouse speed requires a combination of process improvements, labor optimization, and the use of automation. Streamlining processes such as picking, packing, and shipping help to create efficiency through an improved workflow.
Additionally, ecommerce businesses can train their staff on how to be more efficient with their tasks to further optimize labor costs. Automating manual processes helps ecommerce companies reduce inefficiencies and build an agile supply chain that drives higher profits. Investing in a Warehouse Management System (WMS) is also key for ecommerce businesses to gain visibility into operations and enable better planning decisions for maximum efficiency gains.
Why is time important in a warehouse?
In the supply chain management role of a warehouse, time is a scarce commodity. The firm as a whole stands to benefit from figuring out how to get the most done in the least amount of time, whether that’s setting up pay clocks to reward staff or setting up delivery schedules to satisfy customers.
Conclusion
Deciding on an e-commerce warehouse is a huge decision for any business. There are a lot of factors to consider, like the size, kinds of warehouses, location, etc. and it’s important to choose the right one for your specific needs. I hope that this blog post has helped you understand some of the key points to look for when making your decision.
If you need more help or want to talk through your options with someone, I’m here for you. Call or schedule a free consultation with me today, and I’ll be happy to chat with you about finding the perfect e-commerce warehouse for your business.
