Warehousing is an important part of business since that is where your products stay until they get sold but there are a ton of storage options you can use, some specialized and some general purpose.
The question now is, which one fits your needs? Well, in this article I’ll discuss ten different warehouses in modern eCommerce you can use as an e-commerce business person and even provide some advice on choosing a warehouse.
The 10 Best Warehouse Types For Modern E-commerce
1.Private Warehouses
This type of warehouse is personally and exclusively owned by the business. They are preferred by large e-commerce stores that possess a huge inventory of products to be stored and need things to be done a certain way.
If you decide that you want a private warehouse you can either build it from the ground up, lease the entire warehouse out or purchase an already built warehouse.
Benefits
Complete Control: This option gives you a whole lot of control and flexibility on how your products are handled and stored. You do not need to seek approval or require support in the event you need to change your mode of operation.
You will also be free to customize the structure based on the needs of your business, adding or removing elements till you are satisfied.
Long-term Potential: If you know you will stay in a certain location for a significant amount of time or will be there permanently, having your warehouse is the best option. In the long run, the cost of setting up will be paid off.
Drawbacks
Expensive To Set Up: This is the main disadvantage. Building, buying or leasing your warehouse can get pretty pricey.
Once it is built, you will also have to handle its maintenance, outfit it with the needed software and hardware, hire the needed labour and others.
For this reason, I would recommend this option for only large stores that need complete control over their inventory’s storage.
2.Public Warehouses
This is a warehouse that is owned by a private warehousing agency who are renting or leasing out the space to businesses to store their products.
This option is a safer option for up-and-coming online businesses that lack the kind of hefty capital they need to own their own storage space.
An agreement is made between the agency and the business renting the space out on how payments will be made, how much space is needed, and how long the space will be held.
Benefits
Very affordable: When compared to the cost of private warehouses, this option is cheaper and way more accessible to the public.
Also, since you will be paying based on the space you rent out, you can collect only the amount of space you will need which reduces the cost.
- Flexible lease periods: This benefit is great if you know or are not sure you will be staying in that particular location for long.
- Scalability: You can choose to pay more for more space whenever you see fit.
- Comes with the basic infrastructure and staff: Things like building maintenance, managing inventory, and employing or paying for labour are no longer on your neck.
While they may not provide high-tech infrastructure like some other warehouses we will discuss, they do provide the basics you will need to start your business.
Drawbacks
Less features: When you pay for a public warehouse, more often than not, you are just paying for a space to store your products. That’s it.
There are usually no additions such as inventory tracking, specialised tracking, or fulfillment plans you may also need to run your store. So you need to be prepared to handle all those yourself.
Less control: While you still have some control over your products, you cannot just do things like making significant changes to the storage space without collecting permission from the managers.
You will also likely not be able to add your layer of security like CCTV cameras or security guards.
So your products will be at the mercy of whatever form of security that is provided which varies based on the standard of the warehouse you are leasing from.
3.Smart Warehouses
With the exponential rise in the use of artificial intelligence, it was only a matter of time before someone integrated A.I. into the inventory story and it has been done in the form of smart warehouses.
A smart warehouse is one where all storage and inventory logistics are handled and managed by AI, robots, and drones.
Everything from sorting products, packaging goods, and handling deliveries is automated and performed by the A.I and robots.
Benefits
Increased efficiency and accuracy in product handling: Since the human factor has been majorly removed, the margin of error will be drastically removed.
It also becomes a lot more efficient since drones and robots don’t get tired and do not require breaks or holidays. This means tasks get done a lot faster.
Drawbacks
Can get expensive: Acquiring the drones, robots, and then software required to start a smart warehouse is quite expensive.
This is because these technologies are still technically in their infancy, so acquiring them will require you to reach out to the manufacturer to tailor-make drones capable of performing the tasks you require.
Then there’s the cost of maintenance. Ensuring these drones and robots stay functional will require routine servicing and checkups and this can get expensive depending on the amount you employ.
Requires training and upskilling staff: Your employees will need to know and understand how to manage these technologies. This means they need to undergo training sessions that can cut into work hours.
4.Bonded Warehouses
A bonded warehouse is used to house imported goods whose customs duties have not been paid. They are usually government-owned but sometimes, they can be privately owned.
To be able to own a bonded warehouse as a private organization will require you to obtain licenses from your government.
It is called a bonded warehouse because they are rented out on bonds provided by the government which get refunded when the products are cleared by customs.
This means that when your imported products get stored in these warehouses, the government issues you a legal document called a bond and you give them money. Once your product gets cleared, you give the bond back and get your money back.
This is especially important because of the way businesses traditionally use these bonded warehouses.
Once the product gets imported and stored, you do not need to immediately pay. Businesses take advantage of this by first finding a customer willing to buy the products, then they pay the customs fees and collect their products.
This combined with the bond repayment means your products technically got stored for free until you could pay the customs fees.
Just make sure you get shipping insurance to safeguard your products.
Benefits
E-commerce stores that get their products across borders get to store their products till they find a buyer without paying for warehousing.
The warehouses used for this storage are usually versatile to be able to accommodate different products so your goods are most likely stored properly.
Drawbacks
You are unable to either receive your products until you pay the necessary customs duties.
5.Co-operative Warehouses
These warehouses are owned by a collection of business organizations called a cooperative who share the space. This means that a bunch of companies come together to pay for a warehouse they can then share.
These co-operative warehouses are usually non-profit, focused more on providing its members spaces to store their products.
You can do this by going into forums or looking to friends or family who possess similar online stores like yours and then coming to an agreement to share the costs of paying for a warehouse.
Benefits
Reduced Cost: Since two or more businesses are coming together to pay for the space, the payment for each individual is greatly reduced.
This way they can even go ahead to acquire a storage space that has more space and better features than what they could have gotten individually.
The cooperative can also share the cost of hiring labour to maintain and manage their products and goods.
Drawbacks
Doing this will require complete trust among the members because should one of the businesses withdraw from the agreement, that could incur extra costs for the remaining members.
6.Consolidation Warehouses
The primary purpose of a consolidation warehouse is to gather goods from multiple suppliers or manufacturing plants. These goods are then consolidated or grouped based on their destination or delivery route.
These warehouses are used by 3PL companies to deliver products going to the same place in one large batch.
Because long-haul freight companies often charge for entire container loads, consolidation helps speed up the process of filling a container. This not only saves time but also reduces shipping costs.
Benefits
If you regularly send a lot of goods to a few specific places, using consolidation warehouses can make the process more efficient.
Drawbacks
For B2C e-commerce brands, it’s unlikely that you consistently sell large volumes to just a few locations. This makes it challenging to find suitable consolidation partnerships leaving you to handle your shipping yourself.
7.Government Warehouses
These are just public warehouses owned by the government. The government reserves these warehouses to store government properties but are then opened up for the public when there is excess space.
These spaces are usually cheaper than privately owned warehouses and offer more peace of mind since it is government managed.
Benefits
They possess the same benefits as a public warehouse although there are a few bonuses in that the spaces will be cheaper and more secure than public warehouses.
Drawbacks
It possesses the same drawbacks as a normal public warehouse.
8.Climate-Controlled Warehouses
If you have temperature-sensitive products, you would likely require the services of a climate-controlled warehouse.
These warehouses are kept at specific temperatures, humidity levels, and so on depending on the kind of product being stored.
For example, products like clothing require a particular humidity level to prevent the formation of mold or mildew. A climate-controlled warehouse will be needed to keep such a product fresh for sale later on.
Benefits
You get to keep your climate-sensitive products fresh for sale for a long time till they get a buyer.
Drawbacks
Due to its specialized nature, it can only be used to keep products that require climate control so if you have both climate-sensitive products and normal products in your inventory, you will need to pay for two different storage services.
9.Distribution Warehouses
These are warehouses designed to not only store inventory but also provide delivery services. The products don’t spend a lot of time in storage in these warehouses. Once the product gets in, it can at any time get packaged, sorted, and delivered to the customers as fast as possible.
Take note, a distribution warehouse or center is not a fulfillment center.
Benefits
Provides a single point for products to get stored and delivered at a moment’s notice.
10.On-Demand Warehouses
In this kind of warehousing, a business that is experiencing a sudden increase in inventory production rents out the storage space of another business that has an excess.
Benefits
Quick access to available storage in the event of an unplanned increase in inventory production.
Drawbacks
If the owner requires the space back, you will most likely have to clear out of the space once your lease expires. This kind of storage is best suited for the short term.
Choosing The Right Warehouse For You
Factors To Consider
1. What are you storing: The kind of product you will be storing will heavily determine which warehouse you will need. Does it require some special kind of storage or can it thrive anywhere?
Once you can answer that question, your choices will get narrowed down to maybe two or three warehouses. Now you can start thinking about other things like pricing.
2. Affordability: How much can you budget for storage? You need to know how much you are financially capable of investing in warehousing your products.
3. Flexibility and Scalability: You need to factor in the growth of your store. Can the warehouse you are about to choose to grow and expand as your store grows?
4. Availability of experienced labour: You also need to check if the warehouse you are about to pick has enough trained manpower to manage and handle inventory, maintain the warehouse, and provide adequate customer support to you when needed.
Qualities To Look For
- The presence of experienced maintenance and logistics staff
- Great security
- Appropriate storage space
- Great customer service
- Well-built and designed structure
- Availability of needed storage conditions e.g a temperature-controlled environment
- Quality check processes
- Up-to-date mechanical hardware and software
- Alerts or messages when stock is low
The awesome thing is, you do not need to look too far to get a warehousing agency that has all these qualities. Globallyfulfill provides all these and more.
