When we think of small eCommerce entrepreneurs, it can often evoke images of the creative jewelry maker with supplies scattered all over her home office. Or the homemade electronics manufacturer surrounded by a garage full of circuit boards.
It’s almost become glamorized to have all your inventory, supplies, and storage operations located in your own home (especially if you’re a small eCommerce seller). Spending money on upgrading your logistics workflow usually feels abstract or inaccessible to budding eCommerce businesses.
We get it. It’s not as exciting as investing in product R&D, marketing tactics, or strategic business partnerships.
However, upgrading your warehouse management setup is an oft-overlooked way to gain an edge over the competition.
By the end of this post, you’ll know:
- The two key factors in upgrading your warehouse setup
- The benefits of upgrading and risks of not upgrading your warehouse setup
- Accessible alternatives to renting warehouse space — no matter your business size
Why Many eCommerce Warehouses Become Garages and Living Rooms
Before we dive into the benefits of upgrading your eCommerce warehouse setup, let’s address some objections right off the bat.
If you’re a small eCommerce operation feeling resistant to this conversation, you may be thinking one of the following sentiments:
“I’m way too small to outsource”
Outsourcing help feels so corporate; so anti-creative. But the reality is that you simply cannot manufacture more hours in a day or more space in your home office. For that reason, if scaling your business is on the horizon, there’s no way around outsourcing your warehouse operations.
There are multiple routes you can take here, many of which we’ll discuss later in this post.
“Warehousing costs too much”
For some reason, warehousing carries “big corporation” energy with it. The truth is, warehousing has never been more accessible, especially through 3PL (3rd-party logistics) providers like Amazon FBA and Fulfilled by Shopify.
Let’s be honest: we budget money for things we really care about. If warehousing were a priority, we’d find a way to make it happen. And when you break down the actual ROI of warehousing, you’ll start to see the financial potential it opens up for your business.
“I don’t want to delegate anything”
When we strip away all the other reasons and get down to the core of the issue, it’s usually a fear of delegation. We get it. There’s no one that cares more about your business than you. This is your baby, and the thought of handing off any part of it to someone else is terrifying.
But this is an emotional objection, not a logical one. If growth and profitability are your goals, we need to put our business hats on (as painful as it may be) and take an objective look at the benefits of outsourcing logistics and warehouse operations. It can even afford you the ability to finally take that vacation you’ve been putting off.
What is eCommerce Warehouse Management?
What exactly is “warehouse management” anyway? Simply, it’s the optimization of all the disciplines involved in the ingestion, storage, assembly, processing, and shipment of goods to your end-users.
Even if your “warehouse” is your living room, all of these disciplines are necessary if your goal is consistent customer satisfaction.
There are two primary factors that serve as the foundational elements of any warehousing strategy.
Location simply refers to the physical place you store, assemble, pack, process, and ship your products. As your SKU count grows, your business scales or you hire employees, your location matters a lot.
It determines how quickly you can find the products and shipping supplies you need, and it can even help you reach previously unreachable markets (more on that below).
The second foundational element of warehouse management is your system. Your system refers to how you manage and track things like:
- Inventory COGS (cost of goods sold)
- On-hand inventory
- Safety stock
- Barcoding and SKU technology
- Customer demand forecasts
Now, you might be thinking to yourself, “I don’t need a system. My business is so small, I can manage everything in my head.” Well, that in itself is a system (and not a good one).
The very reason we developed SkuVault is that we saw the need for a robust, integrated warehouse management system for eCommerce businesses. With all the complexity (and opportunity) in selling online, the days of doing things in an Excel spreadsheet or in your head are long over.
Benefits of Upgrading Your eCommerce Warehouse Management Setup
We’ve established the two key elements that must be addressed to upgrade your warehouse management. So what’re the potential benefits of investing in a better setup?
You Lay the Groundwork to Scale
Every “solopreneur,” no matter how efficient they may be, will eventually run into a glass ceiling of profitability. At that crucial juncture, they must decide whether to keep things at the status quo as a mom n’ pop organization or scale their operations.
For some, the allure of greater profits and building an eCommerce empire has no sway over them. They want to keep it in-house and small. Fair enough.
But for anyone who wants to grow their business beyond just themselves, scaling is essential. And as you might guess, a prerequisite to scaling is upgrading your warehouse management location and system.
Do you really want hired employees picking and packing products in your house all day? What happens when you need to hire two or three more?
If you’re managing everything on your laptop in Excel, what happens when you need to order more product or you invest in multiple storefronts and channels? Can you aggregate all your multi-channel orders by hand and keep every customer happy?
These are real questions growing eCommerce businesses have to ask themselves, and your warehouse management location and system play an integral role in whether you succeed or fail.
You Can Better Organize Your Products
Let’s face it. Home offices and living rooms are not designed for product and material storage. Consider the attributes of your average warehouse:
- Optimal paths for foot traffic
- A dedicated processing station with shipping materials
- Vertical storage for easy access to products
- A separate area for kitting/assembly (if appropriate)
These attributes aren’t random. They’re based on warehouse best practices that professionals have honed over several decades.
Consider the implications of disorganization. A disorganized warehouse location means you’re more likely to:
- Experience stock-outs due to inventory ignorance
- Run out of storage without realizing it
- Ship the wrong inventory to the customer
- Physically lose product
All of these lead to poor customer experiences. Undiagnosed and untreated, these are detrimental to any eCommerce business.
You Can Access New Markets and Ship to Them Faster
More efficiency in your storage, packing, and processing means orders are fulfilled more quickly. This, of course, leads to positive customer experiences and repeat business.
Upgrading your warehousing strategy can even open up entirely new markets to your business. This segues nicely into 3rd-party logistics.
eCommerce Warehousing With a 3PL
If all of this sounds like a total headache and you’d rather just pay someone to take care of it all for you, 3rd-party logistics is the answer to your prayers.
We’ve done a deep dive on 3PL in this blog post, but the basic idea is that you’re outsourcing your entire warehouse management workflow.
There are several benefits (and downsides) to 3PL, but it’s especially appealing for eCommerce businesses who want to be as hands-off as possible in their warehouse management.
Other benefits include:
- Faster order fulfillment due to a dedicated team of warehouse professionals processing your products
- Most 3PLs offer flexible plans, scaling up or down with your business goals and customer demand
- Access to major marketplace infrastructures like Amazon and Shopify
But as mentioned above, the biggest financial benefit of investing in a 3PL is the ability to access previously unreached markets — both internationally and globally.
We’ve used this example before, but it’s worth repeating. Say you own an outdoor clothing brand somewhere on the East Coast. You’ve got West Coast fans gearing up to hike Yosemite, but it makes no sense for them to purchase your product.
Thanks to Amazon, they (like most other consumers) expect two-day shipping. But shipping weight across the country within two days is astronomically expensive.
You want to lower the cost to get the business, but then you’re cutting deeply into profits. Sound familiar?
Most 3PL providers (such as Amazon FBA) have warehouses dispersed throughout the country and even internationally. When you outsource your warehouse operations with a 3PL, you’re “riding the coattails” of their pre-existing infrastructure.
It really is a win-win (if you can justify the initial investment).
Shopify Fulfillment Network (which we’ve also written about here) even utilizes machine learning algorithms to inform how they distribute your inventory. If you sell 20% in the mid-West and 80% on the East Coast, they’ll keep corresponding product numbers at those warehouse locations.
Most eCommerce business owners simply assume warehousing is too far out of their reach and don’t explore these possibilities. All the while they’re leaving money on the table with these unreached markets.
When is it Time to Upgrade My eCommerce Warehousing Setup?
How do you know when it’s time to upgrade? There is such a thing as “outscaling yourself.” That is to say, upgrading before you’re ready.
Here are some questions to consider:
Does your safety stock exceed your current location’s capacity?
Preparing and storing safety stock is one of the first things you should do to avoid poor customer experiences. The process requires some time and a bit of math, but it can save you from the gut-punch of unnecessary stock-outs.
If you find that your requisite safety stock exceeds your location’s capacity — whether that’s an existing warehouse, your home office, or somewhere else — that’s a problem.
You never want to knowingly risk stock-outs if you can help it.
Are you spending more than 75% of your working hours fulfilling orders?
This figure is somewhat arbitrary, and every business owner must decide on the right ratio for them. But if you’re doing the grunt work of storing, processing, and shipping orders, when are you making time for high-value work that only you can do as the leader of your business?
Vision-casting, goal-setting, strategic partnerships, and planning — all of these things don’t happen accidentally. You have to make time for them. And if you’re spending the lion’s share of your day in the weeds of order processing, your business will stay stagnant.
This is a sure sign that it’s time to upgrade your warehouse strategy and start delegating.
Do you feel disorganized or want separation between home and business?
“A cluttered desk is a cluttered mind.” It’s been proven that our physical workspaces have a significant impact on our productivity, mental clarity, and focus.
If you work in space littered with shipping materials, half-finished tasks, and indiscriminate products, you’re not operating at 100%. How could you? All of this clutter is vying for your attention and subconsciously weighing on you.
Not to mention the fact that when your eCommerce workspace is in your domicile, it’s nearly impossible to shut “work mode” off. It’s so convenient to just pop in and work a few hours, that you blur the lines between family, work, play, and business.
For business owners seeking balance, this isn’t ideal.
Are you experiencing significant year-over-year growth, expanding your product line, or taking on multiple sales channels?
Each new SKU, partnership, or sales channel adds multiple levels of complexity to your warehouse operations. These variables compound exponentially and can get unruly without a dedicated system.
This is why SkuVault integrates all of your storefronts into one “single source of truth.” This allows you to track your sales across each channel and your profits in aggregate. That way, your system is working for you — not the other way around.
System or Location — Which Should I Upgrade First?
At this point, you should be adequately convinced (or at least well-informed) of how upgrading your eCommerce management setup can make you more competitive.
Now, let’s get to the brass tacks of implementation.
“Measure twice, cut once” is the adage I’ll point to here. Whenever you’re introducing new technology or processes into your organization, you’ll want to take it slow and consider the implications.
For that reason, we don’t recommend upgrading both your location and system simultaneously.
A System Lays a Foundation
There’s no question that the first thing you should upgrade is your system. A system is like a blueprint, your location (warehouse) is the plot of land you build your house on. It’s probably not wise to purchase a plot of land without any inkling of what you’re going to build.
In the same way, renting a warehouse or outsourcing to a 3PL without a dedicated warehouse management system (WMS) in place will probably create more issues than it’s worth.
The great thing about a WMS like SkuVault is that it’s location-agnostic. Whether you’re in your living room or in 30 warehouses spread across the world, inventory management best practices don’t change.
Managing your supply chain, aggregating all your channels, forecasting demand — these things are necessary for all eCommerce businesses whether they’re doing $100 a day or $1,000,000 a day.
For that reason, it’s a no-brainer that getting control of your inventory with a digital system is a better way forward.
Once you’ve logged your inventory, created a barcode and SKU system, and integrated all your necessary software, you’ll be all the more ready to hit the ground running once you upgrade your location.
Benefits of Using Robust eCommerce Warehouse Management Software
Let’s drill down into some of the specific ways that a WMS like SkuVault will help you as you level up your warehouse strategy.
Integration With Critical Technology
As your organization grows, your “technology stack” will grow as well. Think of all the systems required to keep your business humming:
- Payment processors
- Your website
- Accounting software
- Channel management
If some of these are unfamiliar, that’s only because you haven’t had a need for them yet. Once you begin scaling, these technologies will become part of your regular workflow.
SkuVault acts as a one-stop-shop for all your critical technology. We offer integrations with all major eCommerce and business software. That way, you don’t need to log in to two dozen back-ends and manually reconcile your critical data.
For a full list of our integrations, see this page.
Easy Barcode and SKU Scanning Systems
One of the easiest (and cheapest) things you can do to upgrade your eCommerce strategy is to create a barcode scanning system. A scanner can be had for under a hundred dollars, and though this technology is over half a century old, it still works wonders for mitigating human error and staying organized.
While you can rig up a hacky barcode scanning directory in Excel or other programs, it’s much more scalable and clean to have your barcode system right within your WMS. SkuVault not only facilitates barcode and SKU scanning, but you can embed other critical metrics in your codes such as lot or group numbers.
All of this serves the greater purpose of keeping you streamlined, organized, and profitable.
More Efficient Order Fulfillment
Visibility into your inventory numbers happens in real-time with SkuVault. That means there’s no need to manually update spreadsheets or pull data on a weekly basis. This helps you make business decisions and fulfill orders more quickly.
Speaking of fulfillment speed, SkuVault also generates digital or printable pick lists for your pickers — even if that’s only you. These pick lists include the most efficient route in your storage space to avoid backtracking or wasted time.
All of this culminates in faster order processing and overall higher customer satisfaction.
Next Steps in Your eCommerce Warehouse Management
As you consider the questions and arguments in this post, we’d love to help show you firsthand how implementing a better system can increase your profitability. If you’re ready to scale (or just sick of being stuck in the tedium of order fulfillment), SkuVault can help.
Reach out to our team for a live demo today.