When you run an eCommerce business, you probably started at home. You were making products in your garage, storing them in the shed, and shipping orders from your dining room table. At some point, you outgrow your home’s business capabilities. You need to move into a bigger space for production and warehousing.
As an eCommerce business, you do not need a store because your sales all happen online. But you do need somewhere to store your inventory between production and sale. So what can you do? You might rent a storage space for a little bit, but eventually, that becomes unsustainable too. You need more space.
That is where warehousing comes in – with an eCommerce warehouse, you will have more space and access to more services to better support your growing business. Many eCommerce warehouses provide the space to store your inventory while supporting your team with order fulfillment services.
Take a look at how an eCommerce warehouse can help your business grow and how to select the right one for your company.
What is an eCommerce Warehouse?
An eCommerce warehouse is where online retailers store physical inventory before it can be sold to a customer. It is similar to any other warehouse, only with an eCommerce business, there is no physical storefront.
The warehouse may not even be in the same geographic region as the business owner of the store. The eCommerce warehouse is simply where all inventory is safely and securely stored. Because the warehouse may not be with the business and the store owner may not be able to physically check on inventory regularly, a good warehouse management system must be used.
This is so that business owners can know which items are in stock and manage their inventory levels remotely.
Types of eCommerce Warehouses
Many different types of warehouses can be used to store eCommerce inventory. Even if you want to go with one that is dedicated to eCommerce businesses, there are still many you can choose from.
Here are some of the most common types of eCommerce warehouses:
These are warehouses owned by larger businesses, like wholesalers, distributors, manufacturers, large retailers, and online marketplaces. They are built to suit the owner’s needs, but many owners rent out unused space in their private warehouses.
A public warehouse might be owned by a government agency and rented to businesses like eCommerce shops. They are typically cheaper to rent than some other warehouses, but often lack the technology and functionality that many eCommerce businesses rely on with offsite storage.
These spaces are owned and managed by the government, with higher levels of security and oversight.
These warehouses collect, combine, and transport shipments from multiple suppliers or businesses all delivered in the same area. A consolidated warehouse often does not store goods for longer periods, as they typically are a middle step in the logistics and transportation process.
These are under the joint ownership of several businesses in similar industries or sectors that all require the same storage needs.
One way to think of a cooperative warehouse is a private warehouse with more than one owner. These shared spaces can be good for businesses that work together, like eCommerce stores that are all part of the same subscription service.
If there is leftover space, there may be the opportunity for a non-owner or member to rent space in the warehouse.
Another government-owned warehouse, these spaces are meant to be used by businesses importing goods before customs duties have been paid. If your business needs to pay customs duties but does not want to pay when they enter or leave the country and instead pay when they leave the warehouse, a bonded warehouse is a great solution.
Customs authorities manage these warehouses and issue a bond when your business rents space in the warehouse.
An advanced warehouse that uses artificial intelligence and technologies to manage storage, fulfillment, and other tasks, these spaces offer more than just storage to eCommerce businesses.
Many smart warehouses can help with order fulfillment as well, using the new advancements in technology to improve the efficiency of eCommerce fulfillment.
What is eCommerce Order Fulfillment?
Order fulfillment refers to an entire process in eCommerce that starts when a customer places an order and ends when they receive it (or return it, if necessary). While many people think order fulfillment is just packing and shipping the inventory, it involves so much more than that.
For an eCommerce business to have a successful order fulfillment plan, they need to consider all aspects of the process from start to finish.
Order fulfillment involves three main steps: receiving, processing, and fulfilling. When all three steps are complete, then the order fulfillment process was successful.
Your eCommerce store receives an order from a customer. Depending on whether you use an eCommerce warehouse for order fulfillment or whether you handle fulfillment in-house, this step can go different ways – and that will set up the rest of the process as well.
If you use a warehouse, there should be an integration between your eCommerce platform and the warehouse management system so the warehouse gets a notification that an order has been placed.
If you do this in-house, then your team will get the order information from your eCommerce software.
Once the order has been received, whoever is managing order fulfillment can begin processing it. This means that the order data will be verified by checking the shipping address and inventory levels of items included in the order. In most cases, this is done using technology, and human interaction is only needed when there is an issue or error with the order data.
For example, if an item is out of stock or the address appears to be nonexistent, you may have to reach out to the customer.
When you or your eCommerce warehouse finishes processing the order, the next step can begin. When you are fulfilling an order, you need to gather all of the items in the order, package them up safely and securely, and ship them out using the correct carrier (usually selected by the customer at checkout).
Fulfilling the order does not just mean handing it off to USPS or another carrier – you share the tracking information with the customer and handle returns, as well, if there are any problems with the order or unhappy customers.
For many eCommerce businesses, as they grow, this process will be outsourced to a fulfillment partner like a third-party logistics provider (3PL). They will help with everything from the warehousing of goods to order fulfillment to returns management.
How eCommerce Warehouses Fit Into Order Fulfillment Center Strategies
When you are considering your order fulfillment strategy, you may be wondering how an eCommerce warehouse or fulfillment center can fit into that. There are three main strategies for order fulfillment in eCommerce.
It can be very helpful for medium or large eCommerce businesses to understand their choices when it comes to selecting the right one.
In House Order Fulfillment
This is just what it sounds like: you handle your order fulfillment in-house. This means you have warehouse space, staff, technologies, and processes in place to handle order fulfillment from start to finish.
You are responsible for developing relationships with carriers and negotiating shipping rates. You should stay on top of all of the latest trends and technology for managing a warehouse. This can be a big undertaking for many eCommerce businesses, who tend not to need this much space or staff as they do not have a physical storefront.
For many, once they have grown to the point of needing to store large quantities of goods and hire multiple warehouse staff members, it makes more sense to look for a way to outsource this task to a team of professionals.
When you use dropshipping as your order fulfillment strategy, your supplier or partner sends the items directly to the customer who placed the order. This process removes you from the equation, as you will only be responsible for managing your eCommerce store – not the order or the inventory.
3PL Outsourced Order Fulfillment
Because there are a lot of steps, software and AI, and personnel needed for effective order fulfillment, many eCommerce businesses decide to use a 3PL eCommerce warehouse instead. This opens your business up to more opportunities, as the warehouse usually has all of the technological advancements to make the process run smoothly.
Outsourcing fulfillment opens you up to a range of new opportunities, including a wider shipping network, better shipping rates, and improved shipping times. Most 3PLs can integrate right into your existing eCommerce system, making it an easy process to get orders filled quickly and accurately.
By partnering with a 3PL, you will not have to invest in warehouse space, warehouse inventory software or technologies, or payroll for warehouse and fulfillment staff. All of that is built into your 3PL contract!
Benefits of eCommerce Warehousing & Order Fulfillment
eCommerce warehouses are designed to help solve a lot of eCommerce challenges with warehousing and order fulfillment.
These warehouses help your business process, package, and ship orders out quickly and accurately, keeping your customers happy and coming back for more. And by outsourcing, you can get more time back in your day for other tasks, like product development, production, and management of your overall business.
Below are areas where you can see the benefits of using an eCommerce warehouse.
With an outsourced eCommerce warehouse, you won’t need to have fulfillment staff on your payroll. This means that the employees you do have will be able to focus on other important tasks for your business.
They can help with production, product development, marketing, accounting, customer service, and more because they will not have to pack boxes and stand in line at the post office.
You will have more shipping options with different carriers. 3PLs often have a network of shipping partners that you can gain access to, giving your customers more options for things like expedited shipping or even international shipping.
You will often get better rates too, as the 3PL has negotiated rates for their clients with a range of shipping partners.
Your company’s order fulfillment will run much more efficiently with a 3PL handling it, as the systems and processes are in place to make it quick and easy. This can improve the customer experience because orders will be accurate and get out the door and to your customers faster.
Tips for Working with an eCommerce Warehouse
When you decide it is the right time to work with an eCommerce warehouse for your business’s order fulfillment needs, you need to find the right fit. Not all 3PLs will be the best fit for your company, as everyone offers slightly different services and pricing structures. Here is what you need to know to find the right eCommerce warehouse for your shop.
The size and order volume of your business: Are you a small, medium, or large business? How many items do you need to store in the warehouse? Consider the number of items you typically have in inventory and how many orders will need to be filled each month. Find a warehouse that can house that much inventory with staff who can fill that many orders.
Some of the things to prepare for this category before opening conversations with warehouses include:
- Number of SKUs your business sells.
- The monthly order volume that ships each month.
- Predictions for future months’ order volume.
Sales Channels & Technology
What technologies do you currently use? Depending on what eCommerce platform you are on and what inventory tools you use, there may be 3PLs that you can immediately rule out because of a lack of integrations. However, you should be able to find one that can integrate and provide exactly what you need, as most 3PLs will be able to provide integrations.
Here’s what you should know before talking to a 3PL:
- Where do you sell online? (marketplace, eCommerce website, both?)
- What platform do you use?
The Geographic Location of Sales
If you have typically sold locally or just in a region of the United States, you should make sure that the warehouse you use can continue to accommodate those customers promptly. The good news about eCommerce warehouses is that this should be easy – and you should even be able to expand your geographic footprint!
This is the information to bring to a 3PL during the early stages of your conversations:
- Where your customers are located (region, country, etc.).
- How many international customers you have.
- Whether you have historically used mostly ground transportation or other shipping methods.
Customization, Subscription, & Kitting Needs
If your business offers custom products, subscription boxes, kits, or any other special items, you should make sure that your warehouse can handle these requests. This will ensure that your team doesn’t have to continue doing part of the order fulfillment, and the warehouse can take over the full scope of fulfillment.
If this is something you offer, be sure to let the warehouse know about your company’s offerings, including:
- Made-to-order products, custom-made designs, or special gift wrapping options.
- Unique needs or kitting options.
- Whether customization is key for your brand.
Best Practices for eCommerce Warehouses
Use an eCommerce Warehouse Management System
A warehouse management system (WMS) is software that can improve the warehouse experience for eCommerce businesses. They can provide real-time inventory levels and product availability, monitor supply chain issues, support inventory forecasting for future stocking levels and streamline the order fulfillment process. This is to make your company run more efficiently.
Distributed Inventory Across Warehouses
While not available with all e-commerce warehouses, large warehouse networks should be able to distribute your inventory across multiple warehouses. This helps to reduce the shipping costs so that each order is automatically filled at the nearest distribution centers to the customer. This can also reduce shipping costs and provide faster delivery times.
Integrate Into eCommerce Platforms
Integration into eCommerce platforms will make every aspect of your partnership easier. Using that WMS integrated into your eCommerce platform, you will be able to see the current stock availability, forecast inventory, and prepare for sales or seasonal fluctuations. This will also help to set reorder or restocks before shortages happen.
Partnering with ShipNetwork for eCommerce Warehouse Solutions
If your company has decided now is the time to find a 3PL partner for order fulfillment and eCommerce warehouse management needs, Rakuten Super Logistics, now ShipNetwork is ready to help. We ensure your customers’ expectations are met by providing accurate, timely order fulfillment service.
We integrate into many of the most common eCommerce platforms, making your life easy with 24-7 access to inventory levels, order statuses, and other data that keeps your eCommerce store moving along.
To find out exactly how we can help, get a quote today.