When demand goes up, inventory levels need to adjust accordingly so customers aren’t disappointed with out of stocks. Thus, eCommerce retailers lucky enough to enjoy high-volume demand get tasked with deciding how to go about getting additional space.
Plenty of unforeseen factors come into play when selecting a warehousing service for an e-commerce business. Many provide inventory control, picking, and packing, plus transportation services, among other options. Does your business need all those features or do you have simpler needs?
Here are five things to think about when choosing a warehouse for your e-store.
How Much Space Do You Need?
The e-commerce market is booming, and companies are buying or building up warehouse space to keep pace with their growing storage needs. According to the Wall Street Journal, over the last decade, the maximum height of new distribution centers has grown about 25 percent to minimums of 36 to 40 feet.
Massive companies like Amazon can afford to buy and fill their own warehouses. Smaller scale e-retailers don’t need as much room, but they will need additional space as their companies grow. Instead of leasing an entire warehouse, finding the right amount of space within a larger facility is going to be the most cost-effective solution.
Do You Need Help with Inventory Control?
When an e-commerce business is starting out, inventory control is relatively simple because product demand is usually low. Most orders will be on the smaller end then and inventories won’t require much effort to keep pace. When demand increases, it can be quite easy to put counting on the back burner because your time is focused on fulfillment and shipping.
If you decide outsourcing your inventory control to a third-party logistics provider (3PL) is worth the price, it can take charge of your inventory with the ability to get an accurate count within minutes or even seconds depending on their warehouse management system. This increased accuracy will help reduce out-of-stocks and determine optimal inventory levels for your busy and slow seasons. This will reduce storage costs of having too much product on hand.
Are You Willing to Integrate New Technology into Your Current Processes?
When looking for a warehouse, many will have their own software systems capable of handling everything from inventory to accounting. If you’re outsourcing your warehousing needs, you’ll need to upgrade—or integrate your current software systems with that of the warehouse. The cost can vary depending upon what the warehouse has in place, but the benefits will likely outweigh the price.
Once the two systems are integrated, you’ll have access to multiple dashboards and an endless array of information regarding your operations. Integrated systems also boost accountability, as there will now be an audit trail tying transactions to each specific worker. This helps reduce all forms of shrinkage, as well as highlight opportunities for coaching and more intense training for more efficient processes.
Do You Need Help with Packaging?
Packaging is one of the areas where e-commerce owners like to improve their customer experience. Instead of a standard parcel showing up on their doorstep, customers like personalized packaging or some other unique aspect to the unboxing experience. When an e-retailer outsources this function to a warehouse, they can lose the ability to customize their packaging. Unique packaging details usually improves the customer experience, but customization does cost more to produce.
Another way to look at packaging through a warehouse can be based on what products you’re selling in your e-store. If you sell electronics, it’s likely you’ll need additional packing materials to ensure the product survives the transportation process in perfect condition. Depending upon the value of the product, you could also require additional insurance to cover the value of your shipment.
Can a Warehouse Help Your E-Business Properly Scale?
Unfortunately, businesses do not grow at steady rates. This means in a matter of weeks or even days, a large rise in demand could cause you to re-think your supply chain processes. A warehouse can help you with these issues when you’re in your busy season, but they can also help you scale back when your business goes into a lull. Scaling back during slow portions of the sales cycle can help companies add to the bottom line through cost savings. The warehouse can help you reduce inventory levels, which means you’ll be paying for less space when sales diminish. They can also provide fulfillment and transportation services as your business evolves.
As you build your e-commerce business to the point to which you’ll need some additional help or space, be sure to consider these five things to think about when choosing a warehouse for your e-store.