Managing your eCommerce warehouse effectively is key to making sure your customers get the right products — fast.
But there are several eCommerce warehouse options available to businesses of different sizes and product types, so how do you choose the one best suited to your needs?
Here’s a guide to product warehousing and storing, tracking, and managing inventory for efficient operations to help you decide.
What is eCommerce warehousing?
An eCommerce warehouse stores inventory for online sales. Its functions include organizing stock, tracking incoming and outgoing items, and keeping all SKUs safe and secure.
All warehouses store items, but the right type for your business depends on how long you store products and whether you ship to consumers or distributors. You can own and manage warehouses yourself or rent warehouses from companies that handle your inventory management for you.
Why is eCommerce warehousing important?
eCommerce warehouses bridge the gap between manufacturing and order fulfillment, which is essential for running your business efficiently.
Here are the benefits of effective eCommerce warehouse management:
- Makes order fulfillment easier: Whether you’re assembling orders or bulk shipping large volumes of goods, the warehouse setup can help you pick and pack effectively. When you store items in an accessible, organized way, you make things easier for employees to get orders out the door faster.
- Helps with inventory management: In your eCommerce storage facilities, you can implement a system to track available inventory. Accurate numbers help you spot discrepancies and avoid stockouts and overstocks.
- Lowers costs: When you streamline order fulfillment and improve inventory management, you save a lot of time. Warehouse workers don’t have to go back and forth between poorly organized shelves or track down dunnage. They can move smoothly through the space, getting more done in less time so you spend less on labor.
What about dropshipping?
eCommerce businesses that ship straight from an external manufacturer to customers are known as dropshippers. When dropshipping items, you partner with a manufacturer that creates, stores, and ships them for you — all you have to do is take orders and forward them to the manufacturer or supplier.
But when processing orders through a third-party vendor, much of the customer experience is out of your control. The company in charge of shipping is ultimately responsible for getting the right items out on time and in good condition. You don’t have to handle warehousing, but you do have less control over products and the customer experience.
7 types of eCommerce storage solutions
Here’s a quick guide to different eCommerce storage solutions:
1. Traditional warehouses
Traditional warehouses are large open spaces where businesses store goods, often for long periods. Companies usually store large quantities of items here, and staff members move them around with a forklift or other heavy equipment. Those large quantities go to other facilities for distribution later.
You can own or lease a traditional warehouse space. When you rent a space, upfront costs are typically low because you don’t have to buy it yourself. But buying is an investment that appreciates over time. Either way, ongoing costs are higher since you have to pay for manual labor. And you face the risk of human error that could result in lost or damaged inventory.
2. Automated warehouses
Automated warehouses save on labor costs and increase efficiency. They act like traditional warehouses, just with more automation and digital systems that reduce reliance on human labor.
Automated warehouses might implement various technologies, including automated storage and retrieval systems (ASRS) and conveyor systems. These technologies come at a higher upfront cost but reduce ongoing operating expenses and human error.
The market for ASRS was worth an estimated $8.7 billion in 2023 and is likely to grow to $12.7 billion by 2028. And as AI technologies develop and the tasks robots perform become increasingly sophisticated, more and more companies may adopt some form of automation in their warehouse optimization efforts.
3. Fulfillment centers
Fulfillment centers exist mainly to fill orders and process goods quickly instead of storing them for extended periods. Products are usually at a fulfillment center for a month or less as they await shipment, since the center typically receives the inventory, packs and labels boxes, and sends orders quickly. Most also manage returns.
4. Multi-channel warehouses
If you sell goods using different sales channels — like your website, social media, and Amazon — you will need a warehouse that tracks all incoming orders. That’s where multi-channel warehouse management comes in. Multi-channel warehouses have systems that track orders from different sources, process them efficiently, and keep inventory data up to date.
5. Third-party logistics warehouses
Third-party logistics (3PL) warehouses store and distribute goods for multiple businesses. You can rent part of the area within these warehouses instead of using a full one, saving money and space.
Typically, these facilities provide a variety of fulfillment services. They might receive products, organize and store them, and facilitate shipment to consumers and businesses. It depends on the 3PL and your company’s needs.
6. Cross-docking facilities
Cross-docking is a shipping method for businesses with time-sensitive shipments, like perishable products or prescription drugs. It minimizes the time that items spend in storage. Think of cross-docking as a replacement for warehousing. Products arrive, await shipment, and quickly go onto an outgoing truck for customer shipment.
Logistics companies usually run cross-docking facilities. Suppliers send items to the inbound dock, where the facility receives shipments. There, the logistics team sorts the goods and loads them at the outbound dock.
Cross-docking facilities help keep costs down because items only stay there for a short time. Most products ship out within a day of arrival. But they’re only helpful for eCommerce businesses dealing with perishable or sensitive goods.
7. Distribution centers
While fulfillment centers process and ship goods directly to consumers, distribution centers usually send bulk goods to retail outlets. This means these centers aren’t often used for eCommerce businesses — specifically those that don’t sell products in stores at all. Some distribution centers also send orders out to customers, but it’s much less common.
Items typically move quickly through distribution centers to reach retail stores. These centers can be relatively cost-effective because they don’t involve long-term storage. And while they aren’t necessary for 100% online businesses, distribution centers are still helpful for those using a mix of online and in-person sales because they bring goods to retailers.
5 best eCommerce warehousing practices
No matter what type of eCommerce warehouse solution you choose, these best practices can improve warehouse efficiency:
1. Automate your inventory management
Some of the best inventory management techniques rely on automation. These programs collect data during the fulfillment process, following the flow of goods to and through your warehouse so you always have accurate numbers.
When software programs help you track your current inventory quantities, you reduce the chances of stockouts. You can even implement automatic reorder points that trigger a restock when items run low.
2. Distribute inventory efficiently
Organize your warehouse to make it easy for goods to get where they’re going. This means having the best possible layout within each warehouse to make items findable and movable. For example, if you know people often order two items together, place them close to each other on the shelves. And for larger businesses, organizing inventory could mean distributing it by category across multiple warehouses to reduce shipping costs.
3. Rationalize your SKUs
Every product within your inventory should have its own SKU number so you can track individual sales. SKU rationalization measures each item’s profitability by tracking sales data to identify popular and underperforming items. If you notice that a particular group of items isn’t selling, you can offer special discounts to encourage a purchase. Kitting items together can also boost sales.
If you’re not sure how to handle SKUs, try Fishbowl’s inventory software. It makes it easy to track SKUs and create custom listings for kits and other special items. The Sellware plugin also lets you adjust listings on each eCommerce channel without affecting the rest of your platforms.
4. Create an effective pick-and-pack process
Pick-and-pack is a fulfillment process that lets you gather items from your warehouse shelves and put them in shipping containers in preparation for shipping. Let’s say your company sells candles, soap, and lotions. If a customer orders all three, a staff member or robot needs to visit different aisles within the warehouse to get each of these products. In addition, you can pick a single item to fulfill an order or multiple orders at the same time in what is called a batch pick.
For an efficient pick-and-pack process, start with inventory organization. Put popular items or those ordered at the same time frequently close together. Ensure staff know where all items are, and make packaging materials easy to find and use.
5. Integrate the right technology
There are hundreds of different software solutions out there. Find some that optimize productivity without complicating your process.
For example, some warehouse management software automatically modifies inventory data as new sales occur, while barcode scanning makes tracking products in real time easier. Integrating these systems, like Fishbowl, helps sync inventory management across all channels and simplifies fulfilling orders.
Elevate your eCommerce business to new heights with Fishbowl
Fishbowl can help streamline your eCommerce warehouse operations by empowering your company with technologies that set you up for success.
Not only does Fishbowl integrate seamlessly with QuickBooks, but Fishbowl Advanced also offers an add-on Commerce module that you can install to allow for Sellware integration. The module directly imports orders from Sellware and transmits product and inventory updates to your product list, keeping inventory counts in sync everywhere you sell online.
Try Fishbowl’s inventory management software today.