E-commerce warehousing is the process of storing and managing goods that will be specifically sold online, and e-commerce warehouse management involves all the processes necessary to run an e-commerce warehouse.
Few retailers operate and manage the warehouse by themselves. Most are usually managed by third party logistics suppliers, or 3PLs. Their e-commerce fulfillment services include:
- Keeping systematic track of all the equipment and inventory (raw materials and finished goods) in the warehouse
- Monitoring each process that takes place in the warehouse from stock arrival to product shipment
- Avoiding overstocking or out-of-stock situations by accurately forecasting customer demand
- Maintaining proper audits for inventory and warehouse
- Keeping proper reports for stock and recording the stock levels from time to time
- Maintaining maximum warehouse slotting by monitoring the bin, shelf, and/or pallet locations of each SKU
What are the different types of e-commerce warehouses?
Depending on the demand of business, there are different types of warehouses. Generally though, all e-commerce warehouses can provide digital fulfillment while allowing brands to store inventory in locations that are physically near their customer base so that the products can be delivered within the time frame and thus be more cost-effective.
There are four main types of e-commerce warehouses:
- Home-based warehouses Most start-ups or small businesses begin by storing their inventory in their living room, basement, garage or even at their office. This is manageable if the business has a small order quantity. This saves on the storage charges as the home is converted to a warehouse but the disadvantage is the home gets filled up very easily.
- 3PL fulfillment centers or distribution centers An 3PL fulfillment center or a distribution center is a more advanced form of a warehouse. A fulfillment center or a distribution center is designed in such a way so that it can receive, store, pack and ship the inventory systematically. E-commerce businesses most commonly outsource their fulfillment services to a 3PL or through Amazon FBA if they are an Amazon seller. These fulfillment centers are able to use their technologically advanced software and organized system to efficiently handle your orders on your behalf.
- On-demand warehouses In this type of warehouse, a business rents space for storage for short period. Typically, technology companies contract warehouses with excess or shareable storage space to store inventory. This type of warehouse is best suited for seasonal sales or pop-up events, as these warehouses are not needed throughout the year but only when there is a requirement for order fulfillment services not done by them. It is generally outsourced to other fulfillment companies.
- Dropshipping warehouses With dropshipping, the merchant never deals with the inventory. Instead it is the responsibility of the manufacturer of the products. The manufacturer handles the entire supply chain management from producing the product, storing it and then shipping it to the customers. When an order is placed online, the manufacturer directly ships the product from their factory to the consumer’s address. The transit time is huge in dropshipping as this model is mostly practiced overseas. Though this model is convenient for many businesses, the only disadvantage is the merchant has no control over the inventory and or knowledge of the customer experience.
What to consider when picking an eCommerce warehouse for your business
Before selecting your eCommerce warehouse, you should consider:
- The type of products your business sells
- The amount of space you would require for your inventory
- The capital available to spend on outsourcing logistics
- What shipping options the warehouse can guarantee to meet you and your customers’ needs
- Whether their warehouse management system (WMS) can integrate with your eCommerce platform
If you are looking to grow your business in the near future and scale exponentially, you should consider partnering with a 3PL fulfillment center. A 3PL helps to manage and automate the eCommerce logistics processes which include warehousing, order fulfillment, inventory management, shipping, and reverse logistics (returns).
There are a few advantages to using a 3PL for warehousing and fulfillment:
Work directly with eCommerce companies
Many 3PLs work directly with major eCommerce platforms. No sooner than the order are placed in the online store, the details are passed on to a 3PL’s warehouse or a fulfillment center. It is then picked, packed, shipped to the customer from the warehouse.
Easy shipping on marketplaces
Some 3PLs also merge with major online marketplaces. For example, if products are sold on Amazon and eBay, it automatically syncs orders and inventory. This is useful if products are sold on multiple platforms as it stores, manages, tracks inventory all through one provider and software.
Tracking the order
When the 3PL ships an order, the tracking info is sent to the eCommerce store and shared with the customer. This helps to keep customers in the loop and helps them keep track of when they place an order till it arrives on their doorstep.
Better inventory management
A 3PL is an expert in managing the inventory. The job includes tracking inventory levels, ordering to restock inventory, and forecasting the future demand. Maximum 3PLs provide built-in inventory management software which streamlines and automates the process
Less time for order fulfillment
Customers demand to deliver their order fast with free shipping. It is expensive if the fast shipping is done from home or a rural fulfillment center. The shipping cost has to be borne by the business or pass them to the customers. This can be avoided if a 3PL is used.
3PL VS Warehousing
Simply put, warehousing refers to the storage of inventory. It is stored directly from an airport, seaport, and railway. It is a space where a manufacturer stores its products. A warehouse is used by any business. It has a dock to load and unload inventory.
A 3PL fulfillment center provides a multitude of services, including warehousing. They not only store products but also ship them to the end consumer. A distribution center plays an important role in the order fulfillment process.
Best Practices for eCommerce warehousing
Good warehouse practices mean proper management and establishing a successful system of operations leading to good customer experience. Below are indicators of a warehouse that implements warehousing best practices:
- Uses a WMS that integrates with most eCommerce platforms
- Allows for inventory distribution to reduce shipping cost
- Prioritizes the orders as per customers’ demand
- Implements an efficient picking and packing process
- Uses metrics to process order fulfillment and accurately keep shipping records
- Has efficient and effective product returns system in place
For improved business success, enhancing the e-commerce warehousing will help proper management and fast delivery, leading to customer satisfaction.
How ShipBots helps eCommerce businesses grow
ShipBots is a third party logistics 3PL fulfillment center that will store, ship, pick and pack your products on your behalf. At ShipBots, we utilize our comprehensive order fulfillment and warehouse management software to maximize warehouse productivity and minimize internal errors. We integrate with most eCommerce platforms to accurately pick, pack, and fulfill your orders so that you can focus on scaling your business. As your 3PL provider, ShipBots will:
- Receive, pick, pack and ship using personalized software that integrates with your sales channel
- Validate and verify receiving, picking, packing, and shipping transactions
- Track SKUs and update product quantities in real-time
- Advanced warehouse management software (WMS) that can batch orders, print product and bin barcodes, and track inventory
- Manage any volume of orders efficiently using workflows and triggers
- Detailed reports including lot recall, shipping & tracking, and cycle counts
Request a pricing quote today to see if we’d be a good fit for your business.