Online retail is thriving, and many ecommerce companies are scaling up their warehouse operations to meet increasing demand.
But that’s easier said than done.
Many factors impact the cost of warehouse space. Rents and real estate costs, labor costs, insurance, taxes…nearly all of them are pushing overhead up. Not to mention, your warehouse location will impact your whole fulfillment operation.
If you’re trying to decide your next warehousing move, here are four things to keep in mind.
1. Smaller, dispersed warehouses drive optimization
Customers today expect lightning-fast shipping like they get from Amazon and big box retailers, forcing many smaller businesses to replicate their warehousing strategy on a fraction of the budget.
This is part of what’s driving the trend toward smaller, dispersed warehouses. These warehouses can supply metro centers with next-day delivery without the investment of a large regional hub.
Some retailers are opening networks of micro-hubs — some no bigger than a mid-size retail storefront — to distribute packages locally with lightning speed. Others are partnering with local warehousing experts in hot markets to scale infrastructure up and down to meet demand without long-term investment.
But managing a network of connected warehouses in multiple dispersed locations isn’t easy. Companies that want to undertake this fulfillment strategy need advanced inventory control software, warehouse management tools, and a network of last-mile delivery partners.
2. Warehouse space is in high demand
Of course, there’s a cost that comes with putting warehouses closer to high-dollar real estate markets. Buying warehouses in urban areas can quickly become very expensive, and costs are rising thanks to both commercial and residential demand.
This isn’t an issue for a company like Amazon, which can afford hubs near every major metro area in the country. But smaller retailers have to get creative, in some cases relying on alternative real estate strategies, such as repurposing brick and mortar stores to handle click and collect last mile and local fulfillment.
3. It pays to be near the port
Warehousing near the port allows you to get quick access to inventory right when it comes off the ship. It may not seem like much, but this small advantage makes a big difference.
- Reduces the distance trucks need to travel between the port and the warehouse, cutting down on time and costs, and potentially reducing your company’s carbon footprint.
- Moves inventory out of drayage and onto warehouse shelves faster, so you can restock your ecommerce store faster.
- Improves transparency by limiting the time cargo spends on the road, so you can give customers order updates sooner.
However, like urban warehouse space, port-adjacent warehousing is scarce and often hard to come by. And with increasing demand, this real estate is only getting more pricey.
4. Working with a 3PL partner can solve warehousing challenges
Thankfully, there’s another solution that can scale for any size ecommerce business. When you outsource to a 3PL partner, you get the benefits of cutting-edge technology and prime real estate without a huge up-front investment into infrastructure and warehouse operations technology.
Some 3PL partners are close to both urban centers and ports. For example, GlobeCon offers warehousing, freight forwarding, and more near the ports of LA and Long Beach. We handle cargo from the ship to the shelves so your customers get the products they need faster.
The global supply chain is changing fast. Companies that can adapt to these changes with speed and efficiency will get a leg up over the competition.
For some, that means using a different warehousing strategy to prioritize proximity and fulfillment speed. For others, it will mean partnering with an expert at the port to take advantage of new technology with a smaller investment.
No matter your needs, working with a 3PL partner makes it easier, faster, and more affordable to get your cargo where it needs to go.