eCommerce warehouses are specialized facilities that are designed to store, manage, and distribute products for eCommerce businesses. These warehouses are often located in strategic areas to ensure fast and efficient delivery of products to customers. Online retailers refer to warehouse management services to streamline their operations. Below are statistics that reflect the actual state and prospects of eCommerce warehousing:
- The global eCommerce logistics market is expected to reach $856.1 billion by 2027, growing by 21.2% from 2020 to 2027. (source: Allied Market Research)
- The global eCommerce fulfillment services market size is expected to reach $168.37 billion by 2027, growing by 10.3% from 2020 to 2027. (source: Grand View Research)
- The average eCommerce order fulfillment time is 3.1 days in the US. (source: Shopify)
eCommerce warehouses gain traction. Why? Let’s study the issue.
What Is Warehousing
Warehousing is the process of storing goods in a large commercial building. It involves receiving, storing, and organizing products or goods in a warehouse until they are needed. Warehouses are designed to efficiently manage inventory and provide easy access to products when they are required.
Types of eCommerce warehouses
- Fulfillment center: Designed to store and ship products directly to customers. They are typically large and can handle high volumes of orders.
- Cross-docking facility: Used to transfer goods from one truck to another without the need for storage. This is often used for products that are in high demand and need to be quickly transferred to a different location.
- Drop-shipping warehouse: Suits eCommerce businesses that don’t hold their own inventory. Instead, they partner with suppliers who ship products directly to customers.
- Return center: Busy with processing returns from customers. They are often located near the fulfillment center and are designed to quickly process returns and get products back into inventory.
- Multi-channel fulfillment center: This type of warehouse is used by eCommerce businesses that sell products on multiple platforms, such as Amazon, eBay, and their own website. They are designed to handle orders from multiple channels and efficiently ship products to customers.
- A public warehouse is a storage facility that is open to the public for the storage of goods. These warehouses are typically owned and operated by third-party logistics providers who offer storage and handling services to businesses that need temporary or long-term storage solutions. Public warehouses are a cost-effective solution for businesses that need to store their goods but do not have the resources or space to do so on their own. They offer a range of services including inventory management, order fulfillment, and transportation services.
- Private warehousing refers to a type of warehousing where an eCommerce warehousing company owns or leases its own space to store its products. This allows the company to have more control over its inventory and operations, as well as potentially reducing costs compared to using third-party warehousing services. Private warehousing is often used by companies with high-volume or specialized products.
- Contract warehouse: Contract warehousing is a type of warehousing service where a company leases a portion of a warehouse from a third-party logistics provider (3PL) for a specific period of time. The 3PL is responsible for warehousing and shipping for eCommerce, as well as receiving and storing the company’s products. This type of warehousing is often used by companies that need additional storage space for seasonal or promotional products, or for companies that are expanding their operations into new markets. It allows companies to have access to warehousing space without the need to invest in their own facilities or hire additional staff. Contract warehousing agreements are typically customized to meet the specific needs of each company, including the amount of space required, the length of the contract, and the services provided by the 3PL. The costs of contract warehousing can vary depending on the size of the space leased, the length of the contract, and the services provided.
Designing an Efficient eCommerce Warehouse
Being an eCommerce site owner, you may opt for self-warehousing to gain more control over it. Then you need to design an efficient eCommerce warehouse layout. It is essential in terms of optimizing the space for maximum efficiency and productivity.
An efficient warehousing design includes organizing products in a way that makes them easy to find and retrieve, minimizing the distance traveled by workers, and ensuring that there is enough space for equipment and machinery.
Staffing is also an important consideration in eCommerce warehouse design. It is important to have enough staff to handle the volume of orders, but not so many that they get in each other’s way. Training and education are also important to ensure that workers are efficient and knowledgeable about the products they are handling.
In terms of technology, eCommerce warehouses can benefit from automation. Automated systems can help with tasks such as sorting, packing, and shipping, while robotics can assist with inventory management and order fulfillment.
To summarize, we suggest following these tips you can use to design an efficient warehouse:
- Optimize your warehouse layout: The layout of your warehouse plays a crucial role in the efficiency of your operations. Make sure to organize your products in a way that reduces the time it takes to pick and pack orders.
- Use automation: Implementing automation technologies like conveyor belts, automated eCommerce storage and retrieval systems (ASRS), and robots can help you streamline your warehouse operations and reduce errors.
- Invest in a warehouse management system (WMS): A WMS for eCommerce can help you manage your inventory, track orders, and optimize your warehouse processes.
- Implement a barcode system: Barcoding your products can help you track inventory, reduce errors, and speed up the picking and packing process.
- Train your employees: Your employees are an essential part of your warehouse operations. Make sure to provide them with proper training to ensure they can perform their tasks efficiently
Managing eCommerce Warehouse Operations
Warehouses should be managed effectively to offer benefits to online businesses. This activity should cater for managing inventory levels, receiving and processing incoming shipments, picking and packing orders, and shipping orders to customers. How to do that effectively? Right, with the automation. Let’s examine the issue of eCommerce WMSs in more detail.
What is eCommerce Warehouse Management Services?
eCommerce Warehouse Management Services (WMSs) refer to the use of technology and automation to manage the warehousing and distribution of products in an eCommerce business. It is mainly about the use of software and hardware systems to streamline the processes involved in receiving, storing, and shipping products.
These services help eCommerce businesses to improve their efficiency, reduce errors, and increase productivity. Some of the key features of eCommerce Automated Warehouse Management Services include inventory management, order processing, shipping and tracking, and real-time reporting. Let’s consider top WMSs to understand their capabilities.
Top 5 eCommerce Warehouse Management Systems
The top of popular WMSs for eCommerce is occupied by:
- Fishbowl Inventory: Fishbowl Inventory is a popular warehouse management software that is designed for small eCommerce warehouses. It offers a range of features including inventory management, order management, and shipping management. It also integrates with a range of eCommerce platforms like Amazon, eBay, or CS-Cart.
- Shipedge: Shipedge is a cloud-based warehouse management solution that is designed to streamline eCommerce operations. It offers a range of features including inventory management, order management, and shipping management. It also integrates with a range of eCommerce platforms like Shopify, Magento, and CS-Cart.
- SkuVault: SkuVault is a cloud-based warehouse management platform that is designed to help eCommerce businesses manage their inventory. It offers a range of features including inventory management, order management, and shipping management. It also integrates with a range of eCommerce platforms like Amazon, CS-Cart, and Shopify.
- SAP Warehouse Management: SAP Warehouse Management is a popular warehouse management system that is designed for large businesses. It offers a range of features including inventory management, order management, and shipping management. It also integrates with a range of eCommerce platforms like Magento, CS-Cart, and WooCommerce.
- Zoho Inventory: Zoho Inventory is a cloud-based warehouse management system that is designed for small to medium-sized businesses. It offers a range of features including inventory management, order management, and shipping management. It also integrates with a range of eCommerce platforms like Amazon, eBay, and CS-Cart.
These systems are capable of providing a seamless order fulfillment experience for online retailers. Let’s examine what key processes these platforms should handle.
Inventory management is the process of overseeing and controlling the ordering, storage, and use of a company’s inventory. It involves keeping track of inventory levels, anticipating demand, and ensuring that there is enough inventory on hand to meet customer needs.
It is the process of receiving, processing, and delivering orders to customers. It involves the coordination of various activities such as inventory management, picking and packing of products, shipping, and delivery. Efficient order fulfillment is crucial for customer satisfaction and can impact the success of a business.
WMS systems often come with customer service modules that allow warehouse managers to provide better customer service by tracking orders, managing inventory, and resolving issues quickly. These modules also provide real-time visibility into inventory levels, order status, and shipping information, enabling warehouse managers to provide accurate and timely information to customers.
eCommerce warehouse KPIs
Online retailers should use metrics to measure the performance and efficiency of all the components of an eCommerce warehouse system. These metrics help eCommerce businesses to identify areas of improvement and optimize their warehouse operations to increase productivity and profitability.
The most commonly used eCommerce warehouse KPIs include:
- Order accuracy: Percentage of orders that are shipped accurately and on time. It helps businesses track their order fulfillment process and identify any areas for improvement.
- Inventory turnover: How quickly inventory is sold and replaced. A high inventory turnover rate indicates that the business is selling products quickly and efficiently.
- Order cycle time: Time it takes for an order to be processed, picked, packed, and shipped. A shorter order cycle time indicates that the business is efficient in fulfilling orders.
- Order lead time: Time it takes for an order to be delivered to the customer after it has been placed. A shorter lead time indicates that the business is efficient in delivering orders to customers.
- Return rate: Percentage of orders that are returned by customers. A high return rate may indicate issues with product quality or customer service.
- Capacity utilization: Percentage of warehouse capacity that is being used. A higher capacity utilization rate indicates that the business is making the most of its warehouse space.
- Pick accuracy: Percentage of orders that are picked accurately. A high pick accuracy rate indicates that the business is efficient in picking orders.
By monitoring KPIs, businesses can make data-driven decisions to improve their warehouse operations and ultimately improve customer satisfaction.
How to find an eCommerce warehouse which is an ideal fit for your business?
- Determine your needs: Before you start looking for a warehouse, you need to determine your needs. How much space do you need? What are your shipping requirements? Do you need temperature-controlled storage? Knowing your needs will help you narrow down your search.
- Location: The location of the warehouse is important. You want to make sure it is close to your customers and easily accessible for shipping and receiving.
- Price: The cost of the warehouse is another important factor to consider. You want to make sure it fits within your budget and that you are getting a good value for your money.
- Services: Some warehouses offer additional services such as order fulfillment, inventory management, and packaging. Consider whether these services would be beneficial for your business.
- Reputation: Do some research on the warehouse to make sure they have a good reputation. Look for reviews and testimonials from other businesses who have used their services.
Overall, finding the right eCommerce warehouse for eCommerce requires some research and careful consideration of your needs and budget.
Your own warehouse vs. external eCommerce warehouse
Instead of finding an external system for managing your warehouses, you may opt for your own WMS. Let’s see what is awaiting you.
|Own Warehouse Pros||Cons||External eCommerce warehouse Pros||Cons|
|Complete control over inventory management and shipping processes||High initial investment in building or renting a warehouse space||No upfront investment required, as you only pay for the space and services you need||Less control over inventory management and shipping processes|
|Ability to customize the warehouse layout and design according to your specific needs||Ongoing expenses for maintenance, utilities, and staffing||Scalable eCommerce warehouse solutions that can easily accommodate changes in your inventory and order volume||Higher costs in the short term, as you will need to pay for storage and fulfillment services|
|Potential cost savings in the long run, especially if you have a high volume of orders||Limited scalability, as you may need to invest in additional space and resources as your business grows||Access to advanced technology and expertise in warehouse management and logistics||Potential miscommunication and errors if the warehouse is not properly integrated with your eCommerce platform.|
What to choose depends on your business needs, capabilities, and budget.
eCommerce warehousing best practices
Having a warehouse may be challenging without best practices in use. Consider this checklist of activities to make warehousing painless:
- Optimize your warehouse layout and organization to improve efficiency and reduce errors.
- Implement a robust inventory management system to track stock levels and prevent stockouts.
- Use automation technologies such as barcode scanners and conveyor systems to improve accuracy and speed up processes.
- Train your staff thoroughly to ensure they understand best practices and can operate equipment safely.
- Implement a robust quality control process to ensure that all products are inspected before shipping.
- Use data analytics to identify trends and improve processes over time.
- Implement a robust security system to prevent theft and unauthorized access to your warehouse.
- Use environmentally friendly practices to reduce your carbon footprint and promote sustainability.
Customization ideas and cases
The default CS-Cart platform has the Warehouses’ functionality by default. It allows you to set up warehouses, quantity of products available at each warehouse, warehouse priority to ship from, moving time (time to move an item to a warehouse), warning about delay in shipping, etc.
Let’s see what we can customize here for you:
- Add renting payment for vendors to store their products. The vendor selects the products to place in the warehouse, chooses the warehouse, the required area, the storage period and makes a request to the administrator. Vendors can independently transport products to your warehouse, and you can also pick up goods from the vendor for an additional fee. All these activities will have a clear logic and UI to make the process easy and error-free.
- Add the cost of storage space and the storage period. The administrator assigns these values, so that the vendor could form the price depending on their needs.
- Automate generating documents for vendors. Once the vendor sends their request to you, the system will generate a list of items with quantities in stock and barcodes of the selected products.
- Automate settlements with vendors. Vendors can pay for storage right on the platform using their credit cards, or money can be withdrawn from their account balance. For example, a warehouse costs $4 per month, and the goods were in the warehouse for 2 days, then the cost will be: 4* 2/30 (daily payment).
- If there are a lot of warehouses, synchronize the information from all of them. For one of our clients, we made a Multi-Warehouse synchronization modification with the city selector to orchestrate the inventory management within the system.
- Add ability to assign the warehouse in case of return. For YourMart, we made it possible to set up the departure warehouse if the product is returned. The default functionality provides that a customer gets a product from the nearest warehouse according to the customer profile. However, this is not suitable for all cases. With our modification, an administrator can assign a warehouse with the highest priority to receive a product upon return.
Future of eCommerce Warehousing
eCommerce industry develops at a high pace, so is the eCommerce warehousing. It is expected to be heavily influenced by technological advancements such as automation, artificial intelligence, and the Internet of Things (IoT). These technologies will enable eCommerce companies to streamline their warehouse operations, reduce costs, and improve efficiency.
One trend that is expected to gain traction in the future is the use of robots in eCommerce warehouses. Robots can be used to perform a variety of tasks such as picking and packing orders, inventory management, and even transportation of goods within the warehouse. This can significantly reduce the need for human labor and result in faster order fulfillment times.
Another trend that is expected to shape the future of eCommerce warehousing is the use of drones for last-mile delivery. Drones can be used to deliver packages directly to customers, reducing delivery times and costs.
If you have an eCommerce site that is required to cope with large inventory management, it’s time to connect a WMS and automate the process. Our company has experience connecting all kind of eCommerce warehouse management platforms. You can trust this integration to our professional developers.