For the ordinary person, a warehouse is just a warehouse. However, as an e-commerce business owner, you know that beyond its straightforward purpose as space for your storage, it’s also an integral part of your order fulfillment operations.
Warehouses actually come in many different types with each one having their special purposes to keep your goods accessible and obtainable. Ultimately, the kind of warehousing you should choose for your e-commerce business would depend on your industry, location, and particular needs. Here’s a closer look at the 9 types of warehouses that would help you figure out which one is best for you.
9 Types of Warehouses for E-Commerce Businesses
1. Private Warehouse
As the name would suggest, this type of warehouse is usually privately-owned by wholesalers, distributors, and manufacturers. These people need the large, exclusive space to store their inventory, especially during peak season when they buy bulked goods in preparation for the expected influx of orders.
However, due to the large, upfront capital investment required, private warehouses are only ideal for well-established e-commerce businesses that have enough profits to build and maintain this type of warehouse. Despite this, private warehouses are usually a cost-effective option for SMBs looking for a major, long-term presence in a targeted location.
2. Public Warehouse
If you can’t afford private warehouses, you can opt to use public warehouses instead for your e-commerce business.
It’s a type of warehouse that is usually owned by the government (or a semi-government body) who leases the space to companies or individuals with short-term distribution needs. For instance, if you run a big corporation and already own a warehouse, you might need the extra space to keep a surplus of your products for a short period of time. Once inventory clears up at your main warehouse, you can freely discontinue the use of the public space.
However, public warehouses usually have subpar technology. This could affect the quality and efficiency of your order fulfillment process which, in turn, also has an impact on your customer service and overall sales.
3. Bonded Warehouse
A bonded warehouse is owned and managed by the government together with a private agency. Usually, the inventory space is used to store goods that would be imported and exported from the country. The government imposes bonds to the individuals renting out the space to ensure private companies pay the right taxes before releasing their products.
Despite this, the government’s regulation doesn’t force private companies to pay any duties until their items are shipped out. As such, you can avoid monetary loss and keep your items duty-free until you found buyers.
Bonded warehouses are usually seen in ports and docks where goods are received from foreign suppliers. Ultimately, this type of warehouse would fit e-commerce businesses with international operations.
4. Distribution Center
Distribution centers usually have a large storage space that allows fast movement of large quantities of products for a short period of time.
True to its name, this type of warehouse serves as a major point in the distribution system in which items are procured from different suppliers and quickly shipped to various customers. In some cases, delivering food and other perishable items can only take within a day—making it a great choice for food e-commerce businesses. This efficient supply chain process is all made possible by the computerized control systems you can find inside the warehouse.
Distribution centers are strategically found close to urban areas where transportation is abundant. And despite being in the middle of a busy hub, this warehouse is relatively cheaper to rent out compared to other storage spaces.
5. Consolidated Warehouse
A consolidated warehouse is a type of warehousing storage that groups small shipments (usually from different suppliers in the same area) and larger shipments together before distributing them to the buyers at the same geographical location.
As a result, e-commerce businesses benefit from a more economical process of order fulfillment. This includes lower shipping costs and inventory levels as well as the fact that no capital investment is required. Overall, this is best for e-commerce SMBs who are just starting out.
6. Cooperative Warehouse
As the name implies, this type of warehouse is owned and controlled by co-operative organizations such as farmers or a winery group. However, e-commerce businesses that are in partnerships with other companies, also use cooperative warehouses for their operations.
As the storage facility is shared between members of the organization, you can benefit from reduced rates and efficient systems. However, the basic purpose of this type of warehouse is not to increase profits but to help every one of their members.
7. Government Warehouse
This type of warehouse is operated by the government. However, unlike a public warehouse where space is readily made available for private companies, government warehouses are directly controlled by the authorities. As such, when you fail to pay your rent within the due time, the government can dispose of your goods to recover for their losses.
However, since it’s a government property, you can ensure your goods stay safe and secure. This is perfect for e-commerce businesses that are selling higher-priced products such as furniture or jewelry.
8. Smart Warehouse
A smart warehouse is a type of warehouse storage where the fulfillment process and management is automated with artificial intelligence (AI). This usually includes software technology, robots, cranes, and drones.
These AI systems have the ability to perform tasks such as storing, weighing, packing, and transporting without the need for human supervision. As a result, your e-commerce business can achieve quick and efficient order fulfillment that is less prone to human error. However, it’s important to know that having these automated processes come at a heavy price.
9. Climate-Controlled Warehouse
A climate-controlled warehouse is a closely monitored environment that allows you to freeze temperature or keep dirt away (through software), depending on your needs.
As such, this type of warehouse is perfect for e-commerce businesses that sell products requiring special handling conditions. This may include delicate botanical products, perishable food, and sensitive computer equipment among other things.
As an e-commerce business owner, it’s important to know these 9 different types of warehouses and their purpose. This would help you choose the one suitable for your needs, target market, and budget.
After choosing the ideal warehouse for your business, the next step you should take is integrating warehouse management to ensure an effective and efficient supply chain process. As one of the leading B2B courier companies in the Philippines, Worklink Services Inc. can address all your operational needs and help grow your business. Contact us today to learn more!
If you liked this article, check our blog for more information about logistics in the Philippines.