Storage for inventory is a common issue for many eCommerce businesses selling physical goods. Where do I store my inventory? How do I know when I should start using a 3pl warehouse storage facility? How can partnering with a fulfilment centre solve my growing eCommerce business? The surge of eCommerce and rise of online sales is pushing more businesses to find space for inventory. In fact, the amount of warehousing space taken up by businesses in Britain last year was more than two thirds higher than in 2019.
There are several options for eCommerce businesses to utilise when figuring out the best inventory storage solution. From self-storage in your own house or place of business to general warehouse storage, to third party logistics for an actual customer fulfilment centre – also known as a distribution warehouse. It can be challenging to decide the best solution for your online business.
Typically, it comes down to the most cost-effective solution. Smaller businesses that do not have too many online sales might not be best suited for warehousing. Medium to larger size business may be more suited to warehousing and distribution services. However, many larger businesses might be losing money due to inefficient inventory management systems and could benefit more by saving money with a 3pl.
According to a survey of 250 supply chain distribution centres, the average business loses over £280,000 a year due to inefficiencies like improper picking and packing. So, we want to discuss how managing your products can be better, and what the best storage option is for you.
Table of contents
What is warehouse storage?
Warehouse storage pertains to any large facility that is used for storing physical goods. This could be anything from clothes to electronics or planes. Some warehouses are empty while others are organised with a large storage apparatus and pallets. There are a few types of storage.
For example, there is general warehouse storage for the public that seek to store goods for a designated period of time in a single closet-like space. There is cold warehouse storage for grocery store suppliers. There is also regular storage for retail businesses that simply would like to keep stock and supplies for secure warehousing. Then, there is eCommerce warehousing.
This type of warehouse storage is specifically used to store goods before they are sold to customers online. This is what Selazar does specifically as a 3pl. Responsibilities include keeping inventory secure in an organised environment, picking and packing the inventory when orders come in online, forecasting supply volumes, and tracking orders in real-time. Ecommerce warehousing ensures your orders are processed smoothly from intake to final mile delivery.
What is inventory storage?
Inventory management is an integral part of your eCommerce business. Inventory storage specifically refers to the logistics process of organising physical products within a controlled environment, like a warehouse or other large space. The purpose is to organise the physical products in such a way that they can be easily managed, tracked, and quickly distributed to customers.
What established businesses and 3pl companies will tell you is that inventory management is a critical component of B2C eCommerce. With eCommerce warehousing, there is a myriad of processes to ensure optimal operations and smart inventory tracking practices; for better shipping and distribution.
Selazar warehouses are divided into alphabetised rows that organise small to large items. It also includes a custom packaging area, delivery pickup area, and special docking station for the inventory intake process. It is managed so that dispatch speed is much quicker while also being more accurate.
What is inventory management?
Implementing smart inventory management and tracking is critical for supply chain operations. The aim is to be aware of your inventory at any given time, and how much of it you have so you can manage your inventory levels correctly. Mismanaging products can lead to delays in getting products out to customers, reflecting badly on your business. 34 percent of businesses have shipped an order late because they inadvertently sold a product that was not in stock. Digital software can manage inventory with ease so that everyone is aware of what is or is not available.
Inventory management, like Selazar’s, uses innovative inventory software, automation, and digital mapping. Technically speaking there is a lot more than meets the eye with storage and distribution.
Selazar is revolutionising supply chain management through the medium of technology. As a 3pl, we offer services like storage, pick and pack, and shipping, but at our core are a software company. We have gathered an innovative tech team that has created a proprietary software for Selazar alone, uniquely developing an industry-leading API (Application Programming Interface).
When packages arrive in the warehouse at Selazar, they are already labelled, and Selazar scans them before allocating them. Each parcel is given a unique SKU number (Stock keeping unit). The Selazar algorithm automatically calculates the best area for parcels based on the boxes’ size and shape – along with the amount of product. All the relevant data about the package is automatically synchronised, including product description, seller information, customs information, and more. Oh yeah, and it is all done with mobile phones.
Within the Selazar portal, all information is automatically stored and can be seen from the warehouse worker’s mobile device to the end-user (business owner) in real-time.
2-way stock sync
Another added benefit of the Selazar platform is that it negates backorder issues. The system has a two-way sync with Shopify. Essentially, the stock that is held in our warehouse will synchronise with the number of units available in your store.
So, if you have 10 units of stock sitting in our warehouse, your Shopify store’s available stock level will also be 10 units. This allows your customers to freely purchase these items. If there is no stock of a particular unit in the warehouse, your Shopify store can be set up to show an item as being out of stock.
Stock management software such as this streamlines the entire process, greatly diminishing human error.
When a package is scanned in a distribution warehouse like Selazar, it is automatically assigned to a particular area – meaning pallet location or shelf location. This is all part of the intake stock process (ISP) After being assigned to a specific area, a worker takes the quickest route to the area through digital mapping. This allows for a streamlined and efficient process. The advantage of smart automation is that it allows us to not only move stock well during intake, but it makes it easier for processing large volumes of products as well. Packages are pre-labelled, and the scan upon intake provides all the necessary information about the products details making it simple, straightforward, and fast. After this process is complete and an order is placed online by a customer, it is automatically assigned a worker again to pick and pack the products. The is known as pick and pack fulfilment. It is scanned again when ready and then dispatched, which updates live within your online shop.
Self-Storage is inefficient
Smaller business will often keep products within their home, local business, or use a local storage company. This can be a satisfactory solution in the beginning, however, can disrupt the home or business environment as operations expand. Then they need to physically drive and drop off packages which is very time consuming, and expensive. Deliveries will take longer. Plus, the entire inventory must be managed by the same people who need to be focusing on marketing, customer service, and so much more. 38% of customers say they will never shop with a retailer again following a negative delivery experience.
Paying for a general storage unit somewhere locally to store your products may also seem like a clever idea, however, can be limited due to the availability of units. It also takes a lot more time with driving and pick up, causing further delays.
Remember that you will also be paying monthly for general storage units, so you must pay for all the days. This is not necessarily a more cost-effective solution. If you sell out of all your product before the month is over, you are still paying for storage.
Selazar offers a pay as you go model; also known as consumption-based pricing. . If you sell out of stock, there are no further fees.
As businesses grow and develop, some may start to consider the idea to purchase or lease a physical space themselves for warehouse storage. After all, why not control the entire operation?
By doing this your business is going to accrue a lot of extra risks. An increase in demand over the last year due to the pandemic means prices are also rising. One study confirms that the warehousing and storage industry is expected to boom over the next five years at a compound annual rate of 1.8% to £19.8billion. CBRE has reported that the industry was 111% higher in 2020 than compared to 2019.
If you do still try to accrue warehouse space, common costs associated include:
- Leasing costs
- Insurance costs
- Utility costs
- Staffing costs
- Technology costs
These are reasons why a good 3pl provider is a more effective solution; saving your business hundreds or even thousands every month. On top of that, you have the added benefit of not having to deal with the fulfilment centre process, allowing you time to focus on growing the business.
Improving inventory accuracy
With millions of orders being processed every day globally, tracking inventory across multiple channels becomes more complex. 15% of inventory discrepancies have to do with systems not functioning properly or simply not communicating effectively across channels.
Without the proper management system there is no effective way to know:
- The amount of product you have on hand
- Quantity to be ordered to meet par levels
- How par levels need to change based on sales
- How to forecast upcoming sales seasons
- Ongoing overhead costs
Keeping track of all these factors is liable to human error with antiquated ways of supply chain management. Using spreadsheets for smaller businesses is by no means a scalable solution. It is not automatic or efficient enough like smart automation.
Selazar has a 99.9% pick and pack accuracy rate, and their average order fulfilment time from online order to dispatch is under 30 minutes. With the average pick time being only 37 seconds on average, this keeps your costs low, because you are only charged for the time it takes to fulfil the order.
When to switch to 3pl services for warehousing and distribution
There are a lot of reasons why you may need to outsource your fulfilment operations. For example, if you are running out of space and growing faster than you can keep up with, it may be time to switch to a 3pl. Here are some more common issues:
1) Daily Service issues
Are your customers being let down on a frequent basis by slow delivery, damaged packaging, or wrong order fulfilment?
2) Shipping Costs
Is your bottom line being affected by lots of shipping costs?
3) Packing and shipping too complex
Are you struggling with special packaging on top of storage space and stacking? Then it may be time to switch.
You can let Selazar take care of all your storage, fulfilment, and shipping needs. We are the industry-leading 3pl with tech-forward solutions for your business. Call us today to find out more about how Selazar’s smart system helps sellers sell more.