eCommerce Warehouse Management: Everything You Need To Know
Table of Contents
- What is Warehouse Management for eCommerce?
- Components of Effective Ecommerce Warehouse Management
- The Role of Technology in Warehouse Management for Ecommerce Businesses
- What is eCommerce Warehouse Management Software?
- What is an eCommerce Warehouse Management Platform?
- How a Warehouse Management System for eCommerce Streamlines Operations and Boosts Productivity
- Risks of Not Using an eCommerce Warehouse Management System
- How to Select an eCommerce Warehouse Management System
- How The Fulfillment Lab Meets Online Retailer’s Warehousing Needs
- It’s Time to Make Your eCommerce Warehousing Tasks Boost Revenue
The ecommerce industry is ripe with opportunity for new and seasoned retailers of all industries. As digital solutions become more convenient to use, people from across the globe are choosing to shop online.
As of 2022, at least 75% of consumers shop online at least once a month. It’s becoming more important for online businesses to keep on top of their ecommerce warehouse management.
However, without a physical location customers can hand-pick and purchase their items from, online retailers have to figure out how to get their products into their customers hands.
This is where ecommerce warehouse management comes in.
Ecommerce warehouse management is the system business owners use to get their products in their customers hands. How a company manages their ecommerce warehousing solutions directly impacts their profitability, customer relationships, and business reputation.
That’s why understanding ecommerce warehouse management is vital for any ecommerce business owner aiming to thrive in the highly competitive online marketplace.
In this article you’ll learn:
- What is ecommerce warehouse management?
- How ecommerce warehouse management can drive revenue and business growth
- What to look for in a warehouse management system for ecommerce.
What is Warehouse Management for eCommerce?
Conventional Warehouse Management
Warehouse management, in a traditional sense, involves controlling the storage and movement of goods within a warehouse. The objective is to ensure that products are correctly stored, tracked, and dispatched in a way that maximizes both efficiency and accuracy.
Warehouses have been a key component of the trade industry for centuries. The first known use of the word “warehouse” was in Britain, in the late 1300s. While the strategies and technology behind modern warehousing looks very different than it did several hundred years ago, the general purpose hasn’t changed.
Effective warehouse management is still critical for:
- Maximizing operational efficiency
- Ensuring inventory accuracy
- Enhancing customer satisfaction
- Reducing and controlling business costs
Warehouse Management in Ecommerce
Within the context of ecommerce, however, the role of warehouse management becomes more critical to a company’s success. Without in-person customer interactions to build customer relationships, ecommerce businesses must rely on other methods to prove they are a reliable and trustworthy company.
“Warehousing is an effective tool online retailers can leverage to build solid relationships with their customers. eCommerce businesses must view warehousing as more than a means to store and ship their products from. It’s integral to honoring customer commitments and can help them to exceed expectations.”
- - CEO Rick Nelson
Examples of how warehousing strategies can solidify trust with customers includes:
- Ensure timely product deliveries
- Provide honest communication about shipping times
- Prevents hidden shipping costs
- Enables personalized, attractive-looking packing solutions
eCommerce warehousing management is beneficial for streamlining operations too. It gives businesses a reliable way to track inventory in real-time, increase order fulfillment precision, manage returns promptly, and more.
The success of an ecommerce business largely depends on its ability to manage their warehousing complexities efficiently. An effective ecommerce warehouse management system can be easily viewed as a business’s backbone as it will improve profitability, customer relationships, and online reputation.
Components of Effective Ecommerce Warehouse Management
While warehousing solutions can vary, the components of every ecommerce warehouse are generally the same. Each component plays a key part in ensuring products are stored, shipped, delivered and re-stock with efficiency and accuracy.
Inventory storage is where a business chooses to store their inventory. For ecommerce retailers, this could be anything from a garage or rental storage unit, to a multi-location warehousing partner.
One common solution for businesses of all sizes is third-party logistics (3PL). This is when a retailer outsources their logistics services to a company who specializes in product logistics operations - such as inventory storage and distribution.
The different types of ecommerce 3PL warehouses can include:
- Public Warehouses. Also known as rented warehouses, public warehouses rent space to online retailers. The renter is responsible for storing, packing, their goods and products themselves.
- Private Warehouses. Private warehouses are owned and operated by larger companies, such as a wholesale distribution company or online marketplace.
- Cooperative Warehouses. Multiple small business owners come together to own and operate a cooperative warehouse operation. They share the cost-savings that come with owning and operating a larger warehouse.
- Bonded Warehouses. When shipping to an international customer, your packages will likely move through a bonded warehouse. These warehouses are where shipped goods sit and wait at international borders while duties and other border-crossing holds occur.
- Distribution Centers or Fulfillment Centers. All your ecommerce warehousing needs are taken care of in a fulfillment center or 3PL distribution center. From receiving new inventory stock, to sorting, storing, kitting and shipping - everything is taken care of.
Some 3PL warehouses can help establish multiple distribution locations for retailers that help shorten product shipping times. 3PL warehouse service options range from traditional warehousing services to full-service storage and fulfillment centers, each one providing different levels of service.
It’s no secret good fulfillment practices can boost customer satisfaction. Do you know how to make that happen? Read our blogs and learn how to take fulfillment to the next level:
Knowing where your inventory is, how much of it you have, how fast it sells, and how quickly you can replenish it is critical to your business. It’s also a central aspect of ecommerce warehouse management.
Generally speaking, inventory management involves tracking and controlling stock levels to prevent overstocking or stockouts. Balancing inventory management is crucial for meeting customer demand and minimizing warehousing costs.
Key activities of inventory management include:
- Real-time tracking of stock levels
- Regular inventory audits
- Accurate demand forecasting
Order fulfillment encompasses all the steps from the moment an order is received until it reaches its final destination - the customer’s doorstep. This includes order processing, picking and packing items, and arranging for their shipping.
Order fulfillment steps are the activities dictating if a retailer can deliver goods within reliable shipping time. This includes the following warehousing activities:
- Package customization
By making efficient and thoughtful fulfillment processes a top priority, online retailers can more easily ensure complete customer satisfaction.
Often referred to as reverse logistics, returns processing is where product returns are managed. This can include picking up returns from the customer, inspecting returned items, and restocking acceptable items. How retailers handle their returns process can nurture customer trust and loyalty.
In the ecommerce landscape, being able to process returns efficiently is vital. Some surprising statistics surrounding online returns are:
- The average return rate of online purchases is 18.1%
- Almost 63% of customers expect online retailers to accept returns within 30 days of purchase.
- 80.2% of returns occur due to product damage or breakage
- 30% of online shoppers actively seek ways to overspend and return the products they do not want.
The Role of Technology in Warehouse Management for Ecommerce Businesses
Technology has become a cornerstone of effective ecommerce warehouse management in recent years. With new, advanced software and hardware solutions, warehouse operations are more efficient, accurate, and clearly visible to all stakeholders.
“Insert quote here that touches on how technology is revolutionizing/evolving/impacting the warehouse industry with a focus on how it’s improving ecommerce businesses.”
Some key examples of how technology is improving ecommerce warehouse management include:
- Real-time inventory tracking systems
- Automated data collection and analytics
- Digital picking and packing tools
- Online return processing systems
- Use of cloud-based platforms for data storage and access
Each of these advancements plays a pivotal role in enhancing the efficiency and accuracy of warehouse operations for all types of businesses - especially online retailers.
Warehouse Management Software for eCommerce: Driving Better Business Decisions
WMS systems can seamlessly integrate numerous warehousing activities in a way that’s easy for retailers to keep close tabs on their sales, inventory levels, and key logistics. This streamline of data gives them an upper-hand when it comes to making better business decisions.
Examples of business decisions ecommerce merchants can rely on a WMS to help with include:
- Evaluate supplier performance. Real-time data in a WMS can give retailers a bird’s-eye view of how well their suppliers can keep up with demand. This can help them decide to continue forward with a vendor relationship or not.
- Bolster customer satisfaction. A WMS can let retailers in on how accurate and efficient their kitting and shipping processes are. This is information they can use to better their customer experiences and increase customer satisfaction rates.
- Financial planning. A WMS can generate detailed reports on sales, costs, and margins, which supports better, more accurate, financial decision making.
- Demand forecasting. With advanced sales data analyses, a WMS can help predict future demand patterns, guiding a retailer's short and long-term inventory and sales strategy.
There are two primary tools helping ecommerce businesses thrive are eCommerce Warehouse Management Software (WMS) and ecommerce fulfillment platforms.
What is eCommerce Warehouse Management Software?
eCommerce warehouse management software are software programs used by warehouse management operators and teams to streamline and optimize product handling logistics. They are powerful solutions that use innovative technology to provide:
- Comprehensive inventory management across multiple channels and warehouses
- Streamlined and optimized kitting, stocking and fulfillment processes
- Optimization of warehouse labor costs
- Clear visibility of shipping and distribution tasks
- And more.
Who Uses WMS Systems?
WMS software is typically implemented and used by private companies who own and operate their own warehouses, or by 3PL warehousing companies who manage product logistics for their clients.
Online retailers who outsource their warehousing needs may or may not interact with a WMS program directly. WMS systems are typically in-house solutions used by 3PL warehouse providers to manage the online retailers goods.
Capabilities of eCommerce Warehouse Management Software System
Advantages to Online Retailers
Real-Time Inventory Management
Provides accurate, real-time inventory data, minimizing stockouts and overstocking situations.
Manages orders in batches to improve picking efficiency and reduce travel time within the warehouse.
Monitors and manages labor resources effectively to ensure maximum productivity in the warehouse.
Efficient Returns Handling
Streamlines the return process, making it easier for customers to return items and for you to restock returned products.
Integrates with multiple sales channels, centralizing orders and inventory data for easy management.
Utilizes advanced data processing to analyze historical data and predict future demand, aiding in effective inventory planning.
Automated Picking and Packing
Automates the picking and packing process, improving speed and accuracy, and reducing human error.
Detailed Reporting and Analytics
Provides detailed reports on inventory, sales, and operational performance, enabling data-driven decision-making.
Easily scales to accommodate business growth, removing the need for frequent system upgrades or changes.
What is an eCommerce Warehouse Management Platform?
An eCommerce Warehouse Management Platform is a specialized software designed to perform two main goals:
- Manage, optimize, and automate a 3PL warehouse’s operations.
- Give customers of a 3PL warehouse clear visibility, insight and control over their warehousing processes.
Unlike traditional Warehouse Management Systems (WMS), these platforms consider the needs of a warehouse’s customers in addition to the warehouse itself.
Examples of online retailer needs addressed through an ecommerce warehouse management platform include:
- eCommerce Inventory Management. Ecommerce platforms allow online retailers to manage inventory across multiple warehouses in real time. They also can align stock levels with sales data to prevent overstocks and stockouts— in a tailored platform ideal for an ecommerce business.
- Fulfillment. Fulfillment features in ecommerce platforms are specifically designed for online retailers to seamlessly schedule, monitor, and manage customer orders. This can include kitting and packaging tasks as well as closely watching how long it takes for products to be sent for delivery.
- Inventory Projecting. Ecommerce platforms excel in inventory forecasting by analyzing real-time sales data, allowing online retailers to accurately plan stock replenishment and mitigate supply chain disruptions, which not all 3PL WMS systems can fully address.
- Multi-Channel Integration. Ecommerce platforms can integrate with numerous online stores, centralizing orders and inventory in one easy spot. This multi-channel alignment, which is not typically a focus in conventional WMS, enhances the online retailer's operational efficiency.
- Single-item Order Processing. Online retailers often deal with single-item orders, a process that ecommerce platforms are explicitly designed to handle efficiently. In contrast, traditional WMS systems might not provide optimal support for this kind of high-frequency, small-order processing.
- Package Customization. Ecommerce platforms allow for personalized packaging options that align with an online retailer's brand identity, offering a unique customer experience. This level of customization is usually beyond the standard capabilities of a typical WMS.
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Who Uses eCommerce Warehouse Management Platform
Online retailers experiencing rapid growth often turn to eCommerce Warehouse Management Platforms. These businesses need agile and scalable solutions that can adapt to the increased demands of their evolving operations, inventory levels, and customer expectations.
Small-Mid Sized Business Owners
Small to mid-sized businesses also benefit from these platforms, particularly when they outsource their warehousing and fulfillment operations. eCommerce platforms offer them the necessary control, flexibility, and visibility without the need for investing in expensive infrastructure or manpower.
Moreover, businesses operating across multiple sales channels or markets find these platforms invaluable. They provide centralized, real-time control over inventory and sales data, enabling the seamless management of complex ecommerce ecosystems.
How a Warehouse Management System for eCommerce Streamlines Operations and Boosts Productivity
The deployment of a Warehouse Management System (WMS) for eCommerce presents various pathways to optimize operations and bolster productivity.
Here's how a WMS streamlines operations and boosts productivity for ecommerce businesses:
Greater Supply Chain Visibility
An efficient WMS for eCommerce offers greater visibility into the supply chain. It provides real-time updates on inventory levels, order status, and shipment tracking. This ensures timely inventory replenishment, reduces the risk of stockouts and overstocking, and facilitates informed decision-making.
Such increased transparency can significantly improve operational efficiency and customer satisfaction.
Advanced Demand Forecasting
Employing advanced analytics, a WMS can predict future demand patterns, allowing eCommerce retailers to plan their inventory accurately, avoiding both stockouts and overstocking.
Proactive Issue Resolution
A WMS continually monitors warehouse operations, identifying potential bottlenecks or issues and allowing for prompt resolution before they impact productivity.
The transformative benefits of a WMS extend further, including:
- Superior Resource Allocation: Intelligent task assignment improves labor productivity by ensuring employees are effectively deployed.
- Enhanced Security: Advanced tracking systems increase security by monitoring product movement, reducing theft and loss.
- Environmentally Friendly: Paperless operations contribute to sustainability efforts, promoting a more eco-conscious business.
- Improved Competitive Advantage: Efficient operations lead to better customer service, faster delivery times, and improved competitiveness.
Access Business Data from Anywhere, at Any Time
With eCommerce Warehouse Management Systems, data accessibility is no longer confined to the warehouse. Leveraging cloud-based technology, these systems allow business owners to access critical information anytime, anywhere.
This promotes better collaboration among teams, enables swift decision-making, and ensures smooth and consistent operations, even when faced with managing multiple warehouse locations.
Risks of Not Using an eCommerce Warehouse Management System
A key aspect of running a successful ecommerce business is ensuring a smooth and efficient warehouse operation. However, without a dedicated eCommerce Warehouse Management System in place, retailers face several risks that could hamper their business growth and profitability.
Poor Inventory Mismanagement
The first major risk is running out of inventory or shipping the wrong inventory. Without real-time tracking and accurate data, it's challenging to maintain an optimal inventory level.
As a result, you may face scenarios where your inventory runs out prematurely, causing a halt in your operations and loss of sales. On the flip side, mistakes in inventory data can also lead to wrong items being shipped, affecting customer satisfaction and reputation.
Insufficient Storage Space
Next, there's the risk of storage space running out. An eCommerce Warehouse Management System efficiently optimizes storage, ensuring that every inch of your warehouse is effectively used. Without such a system, you might struggle with underutilized or overcrowded storage areas, causing logistical nightmares and even potential damage to your goods.
Stock-outs or Over-purchasing
Finally, not using an eCommerce Warehouse Management System can make it harder to establish good customer relationships. Quick and accurate fulfillment, transparency in shipping, and efficient handling of returns are all critical for a positive customer experience. These factors are hard to achieve without a dedicated warehouse management system.
How to Select an eCommerce Warehouse Management System
The selection of an eCommerce Warehouse Management System (WMS) has a profound impact on business operations. It plays a crucial role in managing inventory, streamlining order fulfillment, optimizing warehouse processes, and ensuring customer satisfaction.
When evaluating WMS options, it's essential to consider the following key factors that align with your business's warehousing needs:
- Assess Your Businesses Needs
- Evaluate a Software Solution
Determine Your eCommerce Warehouse Management Software System Needs
Before you can effectively assess and evaluate the best warehouse management system for your ecommerce business, you need to know your warehousing needs and business goals.
Do you manage inventory across numerous channels or storefronts?
If your business operates from multiple channels or online storefronts you may need a centralized inventory and order management solution that streamlines order processing. If that’s the case, a WMS fulfillment platform may be the right choice.
Platforms allow you to integrate all your sales channels - such as Shopify storefront, social media shops, and other online retail channels. This way, you’ll have a unified view of all your inventory and have greater order fulfillment accuracy.
How much time do you have to put toward warehousing duties?
Inventory management and warehousing take a lot of time and effort. If you have the resources to invest in warehousing tasks such as inventory tracking, kitting, shipping, a customized WMS program may be the right fit.
However, if you can’t dedicate significant hours towards warehousing duties, a WMS fulfillment platform may be the ideal solution. It offers user-friendly interfaces, automated processes, and can handle various warehousing tasks, reducing the time and effort required.
Would having multiple distribution locations lower shipping times and costs?
Shipping times and costs impact a customer’s buying decisions significantly. The faster and cheaper you can get your product to the customer, the better your chances are of overcoming those tricky abandoned shopping cart challenges.
For instance, recent statistics show:
- 60% of customers will abandon their shopping cart if shipping times are too long.
- Free shipping can increase online sales by 30%
Partnering with a 3PL warehouse that has a warehouse management platform customers can tailor to their needs and shipping specifications will help online retailers remain competitive.
Are you planning to grow your business? Do you have the tools needed to manage greater volumes of inventory?
If you anticipate business growth and need tools to handle larger volumes of inventory, you need a WMS system that can easily grow with you. To help you grow without experiencing too many growing pains, your WMS should:
- Offer affordable scalability
- Allowing for increased order volumes
- Integration all your vendors, storefronts and other 3PL providers in a centralized location.
Do product sales fluctuate by season?
If your business is largely seasonal, a WMS solution that allows you to pay just for the services you need, when you need them, will be a good fit. Any solution you consider should easily keep pace with demand in your busy season, but allow you to hang back a bit in the slow season - owithout demanding a minimum volume charge.
How to Evaluate a WMS Software Solution: Understanding Best Practices
To effectively assess and evaluate the best warehouse management system (WMS) for your ecommerce business, it is crucial to understand the key features and best practices that contribute to a successful solution. Consider the following aspects when evaluating a WMS software
ROI (Return on Investment)
Implementing a WMS should deliver a significant return on investment. Look for a WMS solution that offers cost-saving benefits such as increased operational efficiency, reduced labor costs, improved inventory accuracy, and streamlined order fulfillment. Calculate the potential ROI to ensure it aligns with your business objectives.
Inventory accuracy is crucial to maintaining customer satisfaction and optimizing order fulfillment. Choose a WMS software that provides real-time inventory visibility, accurate stock levels, and robust tracking capabilities. This ensures that you can efficiently manage inventory across multiple channels and minimize stock outs or overselling.
Ease of Use
A user-friendly interface and intuitive system are essential for seamless adoption and efficient operations. Look for a WMS software that offers a clean and intuitive interface, simplifies navigation, and provides easy access to critical functionalities. This will enable your team to quickly learn and utilize the system effectively.
Integration capability is vital for seamless data exchange between your WMS and other systems, such as sales channels, accounting software, and shipping carriers. Ensure the WMS solution you choose supports integration with your existing tools and provides APIs or pre-built integrations to streamline data flow and automate processes.
Flexibility in managing inventory minimums is important, especially for businesses with seasonal fluctuations. Opt for a WMS software that allows you to adjust inventory minimums based on demand, enabling you to scale up during busy periods and reduce minimum requirements during slower seasons. This helps optimize inventory management and cost efficiency.
Consider other features that enhance your warehousing and fulfillment processes. These may include order tracking, customizable reporting and analytics, barcode scanning, automated replenishment, batch processing, and multi-location support. Assess these features based on their relevance to your specific business needs.
How The Fulfillment Lab Meets Online Retailer’s Warehousing Needs
The Fulfillment Lab offers a comprehensive warehousing solution designed to meet the specific needs of online retailers. With our global fulfillment software and range of benefits, we provide a seamless and efficient warehousing experience. Here's how The Fulfillment Lab addresses key warehousing needs:
Integrative Fulfillment Software
The Fulfillment Lab's global fulfillment software enables seamless integration with various eCommerce platforms, making it easy to import products and synchronize inventory. Retailers can efficiently:
- Manage inventory
- Track orders
- Customize packages
The software also allows last-minute edits and the ability to incorporate customer service delays, creating a tailored customer experience.
Strategic Fulfillment Center Options
The Fulfillment Lab operates from 14 domestic and international locations, providing strategic fulfillment center options. Based on the customer's location, their system suggests the most optimal fulfillment center to minimize shipping times and costs.
This global footprint allows for efficient order processing and ensures that customers can receive their orders as fast as possible, contributing to improved customer satisfaction.
Customized Packaging and Labels
The Fulfillment Lab understands the importance of branding and delivers customized packaging and labels. This enables online retailers to create a unique and memorable unboxing experience for their customers.
72% of consumers say the design of a product’s packaging impacts their purchasing decision.
By incorporating branding elements and personalized touches, businesses can strengthen their brand identity and leave a lasting impression on their customers.
The Fulfillment Lab offers end-to-end visibility throughout the shipping process. Retailers can track orders, monitor inventory levels, and receive real-time updates on shipment status. This transparency enables businesses to proactively manage their operations and provide accurate information to their customers.
24/7 Support and Personalized Service
The Fulfillment Lab provides round-the-clock support and personalized service from real people. Their dedicated team of experts is available 24/7 to address any queries or concerns. This commitment to exceptional customer service ensures that retailers receive timely assistance, fostering a strong partnership and reliable support system.
It’s Time to Make Your eCommerce Warehousing Tasks Boost Revenue
At The Fulfillment Lab, we help online retailers of all kinds connect with their customers better and get control of their inventory management processes. With a state-of-the-art warehouse fulfillment platform, we’re transforming businesses for the better.
And we can help you too. Book a demo to find out how our effective solutions can turn your everyday warehousing tasks into opportunities for profitability optimization.