1. What are Warehouses?
What pops into your mind when you think of the word ‘warehouse’? Soulless concrete structures? Rows of dingy, smelly crates? Rows of trucks unloading even dingier and smellier crates? Believe it or not, warehouses are a lot tidier than you imagine. As the lifeblood of the e-commerce industry, they need to be regularly cleaned and maintained to ensure smooth operations. And what do they do exactly? How do they help e-commerce businesses? What kind of warehouse would suit a business best? Well, rest assured, for all your questions will be answered today!
2. Ten Different Types of Warehouses
In the simplest of terms, a warehouse is a building that stores commercial goods. But there are as many types and varieties of warehouses as there are goods themselves, ranging from retail warehouses to cold storage. Selecting the right kind of warehouse can make or break a company.
E-commerce businesses usually select the kind of warehouse that is best suited to cater to their specific needs and requirements. The ten major types of warehouses for e-commerce are given below:-
2.1) Public Warehouse
Public Warehouses are owned by the government or semi-government bodies who rent them out to private businesses for the storage of goods. Firms can make use of them on both short and long term basis. Public warehouses are mostly used by businesses with financial or time-related constraints, as they are affordable and convenient. The fees of public warehouses usually take into account both storage and transportation costs.
2.2) Private Warehouse
Private Warehouses are owned by the businesses themselves and are used exclusively for the storage, management, and distribution of their own products. Large e-commerce companies may prefer private warehouses as it allows them to retain a greater degree of control and flexibility over the movement of goods. However, it is also very expensive and therefore out of the reach of many small and medium-sized businesses.
2.3) Cooperative Warehouse
Warehouses that are owned, managed, and controlled by cooperative societies or organizations are referred to as Cooperative Warehouses. Members of the cooperatives can avail these warehouses at economical prices. They are usually non-profit and are looking to uplift the members of the cooperative. Examples include farmer co-operatives and winery co-operatives.
2.4) Bonded Warehouse
Bonded Warehouses are used to store imported goods on which customs duties have not yet been levied. They can be owned by either government or private bodies, though private players need to obtain licenses from the state before opening such warehouses. Companies using a bonded warehouse don’t have to pay any duties until their products have been sold, making it the perfect choice for importers who store their goods in the warehouse for long periods of time until they find a customer.
2.5) Smart Warehouse
Smart Warehouses are a special type of warehouse where all the day-to-day operations including storage and inventory management, are all automated with the help of AI. Tasks like packaging and movement of goods are done with the help of machines and drones. This reduces the margin for error and significantly increases the overall efficiency. Driven by the advent of technology-driven warehousing and storage solutions, smart warehouses are steadily increasing in number, with big e-commerce platforms like Amazon leading the charge.
2.6) Consolidated Warehouse
These warehouses are owned by third-party agencies that bring together products from different e-commerce businesses, who are all looking to deliver in a common area. The goods are ‘consolidated’ into larger groups that are then delivered to the respective consumers. The main selling point of consolidated warehouses is that they are relatively affordable, as well as efficient with respect to time management making them a feasible option even for new companies.
2.7) Climate-Controlled Warehouse
Climate-Controlled or Temperature-Controlled Warehouses are used to store goods that need to be kept at certain specific temperatures. They maintain the humidity and temperature at the optimal level so as to keep the products fresh and safe from contamination. Such warehouses are most suitable for the storage and management of perishable items such as medicines and fruit. Popular examples include cold storages for frozen food, etc.
2.8) Government Warehouse
Warehouses that are owned, managed, and controlled directly by the Central or State government, or by local authorities, are known as Government Warehouses. Both government and private organizations can make use of these warehouses for a fee. They are an economical option for up and coming businesses as they charge low prices and provide pretty much all the required facilities. They are also relatively safe as they are managed by the government. A well-known example is the Central Warehousing Corporation of India.
2.9) Distribution Centre
Unlike the above warehouses, which can be used for both long-term and short-term purposes, distribution centres are used almost exclusively on a short-term basis. They may be used for large quantities of items that need to be transported very quickly. Some goods such as perishable food items are usually transported in less than 24 hours. Distribution centres are a very popular choice owing to their speed and affordability.
2.10) On-Demand Warehouse
On-Demand Warehouses are fairly new but are quickly gaining prominence as an effective warehousing solution for e-commerce. With this, companies that need warehouse space rent or borrow the warehouse space of another company that has an excess. This allows for businesses to perform their operations without the hassle of managing their own warehouse, cutting back costs. It also makes sure that no space goes wasted and the warehouse is utilized to its full extent., cementing itself as an eco-friendly alternative as well.
3. Selecting the Right Warehouse
Now that we know about the major types of warehouses, how do we go about selecting one of them? Choosing the right warehouse for your business is extremely crucial, as the wrong sort of warehousing can hamper your overall logistical process resulting in a poor experience both for the business as well as the consumer.
While selecting a warehouse, some of the most important points to keep in mind are:-
3.1) Type of the ProductYou need to have a clear idea of what kind of products will go through the warehouse and whether the warehouse has adequate facilities to store and transport that specific product safely or not. The warehousing methods that work for clothes might not work for glass items, large products might need more space and larger warehouses than smaller ones, and so on.
3.2) Location of the WarehouseYou should also check up on whether or not the warehouses are well-connected with nearby transport and shipping hubs, how far they are from your logistics service provider, and how long it takes to send goods to and from a particular shipping point. Ideally, warehouse should be in close proximity to major docks, airports, and railroad stations.
3.3) Availability of LabourAnother point to keep in mind is if the warehouses have an adequate labour supply to oversee and carry out the day-to-day operations. The best choice would to be to pick a warehouse in a location with abundant and skilled labour,
3.4) Maintenance of the WarehouseAdditionally, you should also check up on the warehouse itself, ensuring that it meets the standards of the company and is capable of storing and transporting the goods with speed and reliability. Ensure that the warehouse is cleaned often, and safety tests are conducted on a regular basis.
3.5) Costs and AffordabilityLastly, you should also check up on how affordable or economically feasible the warehousing process is. Check with your warehouse on all the operational costs and fees, and also make sure that no hidden charges are eating up your profits.
To sum up, we now know what exactly warehouses are, why they are beneficial for e-commerce businesses, and why you should plan your warehousing solutions carefully. We also covered in-depth the ten major types of warehouses, and the tips to select the best warehouse for yourself according to the requirements of your business.
With the above points in mind, one can be sure to pick the perfect warehouse, or at least- a capable one. With the right warehouse, you can rest assured the logistical process will get a whole lot easier and more manageable for you, as well as a lot more convenient for your customers.