What’s The Best Inventory Storage System for Ecommerce Shops?
October 14, 2019
What do you want to learn?
Storing inventory is a necessary part of running any business that sells physical goods. The storage needs will vary from business to business, based on sales volume, product attributes, and locations sold.
As an ecommerce business, it can be tough to know which inventory storage system is the best for your business. Between self-storage, warehousing and third-party logistics (3PL) providers, how exactly do you know which option is right for you?
What are inventory storage solutions?
Inventory storage solutions are systems that help businesses store, manage, and track inventory. There are several different ways to store inventory and properly manage it: self-storage, traditional warehouses, and partnering with a 3PL.
3 types of inventory storage solutions
The inventory storage system you pick will depend on the size of your business. When you are first starting out, you will likely store your inventory at home: in your garage, basement, or somewhere else. For more established businesses, storing inventory in a warehouse or partnering with a fulfillment provider is a better option.
Here are pros and cons to all three inventory storage options.
When you are first starting your business, self-storage is a likely choice. Since you won’t have the funds to pay for ecommerce warehousing (or massive amounts of products to store), you’re going to store your inventory however way you can. It could be anywhere, such as your place of business, your closet, a storage facility, or at home.
- Cheap (or “free”)
- Easy to access
- Great for starting out
- Inefficient and frustrating
- Leads to storage miscalculations
- Risk of damage and loss
- Doesn’t scale as you grow
Overall, as your business starts to grow, self-storing becomes more of a challenge. Once you start to fulfill more orders per month, you’ll want to consider other options.
2. Traditional warehousing
Traditional warehousing is used by growing ecommerce businesses. You pay for a location where you can send your inventory before it gets picked for shipping. This can be in a storage unit, small warehouse, or even purchasing land and building a facility yourself.
- More professional than self-storage
- Full control over handling your inventory
- Starting in 2021, logistics warehouse tenants can expect to see a 10% rate hike.
- Must hire a workforce to fulfill orders.
- Might quickly outgrow the space or never fully grow into it
- Might not be the most optimal location to reach the majority of your customers
Taking traditional warehousing a step further is on-demand warehousing, or a technology platform that helps you find excess warehouse space but doesn’t run any fulfillment centers.
When you outsource fulfillment to a 3PL, you’re able to store your inventory and pick, pack, and ship your direct-to-consumer orders. 3PLs do the work for you and you’re not responsible for running a full-scale operation.
3PLs are inventory and fulfillment experts that have years of experience and the resources available to store your inventory, while managing other aspects of your shipping and retail fulfillment to maximize efficiency and get orders out as soon as possible.
- They store your inventory and perform all fulfillment services on your behalf
- Most 3PLs have multiple fulfillment centers to optimize your deliveries and save on shipping costs
- Access to inventory tracking and management tools
- Fast shipping and ability to affordably reach your customers
- Inventory warehousing security
- Easy implementation and likelihood of supply chain optimizations
- Provide fulfillment expertise, resources, and partners
- You give up control over inventory
- More expensive than doing everything yourself
Overall, you don’t have to become a logistics and warehouse management expert, and you get more time back to focus on growing your business rather than dealing with inventory and packing boxes.
Best inventory storage option
There are several options when it comes to storing inventory. With self-storage, warehousing, and 3PLs offering a variety of pros and cons, it can be tough to know which option is the best for you. Many businesses start with self-fulfillment and then move to a 3PL.
[Related article: Should You Invest in Your Own Warehouse, or Outsource to a 3PL?]
Unlike self-storage and warehousing, storing inventory with a 3PL puts your inventory exactly where it needs to be when shipping to customers. Thus, minimizing steps in your system to get packages out and improves overall efficiency.
3PLs offer leading shipping services and inventory management, while being easy to work with due to their technology and general expertise in all things shipping, inventory and warehousing.
4 tips for inventory storage
What are things to keep in mind with inventory storage? Having worked with thousands of ecommerce businesses, here are four tips and best practices for inventory storage.
1. Set reorder points for all SKUs
Reordering inventory is always a priority for your ecommerce business. With the right technology, you can automatically set notifications so you know when it’s time to replenish inventory for each SKU.
3PLs like ShipBob let you do this easily with their software, using accurate historical data and even help with inventory forecasting. Best sellers tend to sell out faster than the rest of your inventory, so adjust your reorder point and reorder quantity accordingly.
2. Implement inventory management and tracking
You can still use spreadsheets to manage inventory reports, but this has fallen out of favor as affordable apps and tools now provide inventory management software that’s affordable for most businesses. If you’re working with a 3PL like ShipBob, this is already included!
3. Know when to upgrade
If your storage solution isn’t working for you, but your business is growing, it would be a great time to upgrade storage to something that works better for your business. Do this before big sales come in so you can optimize efficiency as fast as possible.
4. Perform inventory checks often
Inventory checks are a way of making sure you have just enough inventory on hand. This includes inventory reconciliation on a scheduled basis (daily, weekly, monthly, etc.). This helps you stay up to date with inventory accounting, and minimizes theft and damage as you’ll be better able to track where your products are.
Don’t know how to get started? ShipBob can help
At ShipBob, we pride ourselves on being the best 3PL for ecommerce merchants. With our integrations with major ecommerce platforms, best-in-class technology, fulfillment centers across the country, and our inventory and order fulfillment services, your inventory is in good hands.
ShipBob gives you the tools you need for inventory control, order management, and 2-day shipping. To save on overall inventory storage costs, partner with the ShipBob team. Request a quote by clicking the button below.