Today’s retail companies have a wide variety of options to store, manage, and ship goods to customers. The key for most companies is to understand how to find the right choice for their particular business.
Among these choices are some shipping and logistics tools that often sound similar but can provide a very different result. To help you assess how to get goods to clients, consider the pros and cons of the four main warehouse options available to a business of any size.
1. Onsite Warehouse
The most traditional and common method to store inventory and send it to customers is, of course, to maintain a warehouse on your own property. The biggest pro for this method is that you have total control over the operation. You choose the organization scheme, the inventory management system, the software, and the freight partners. Your company is in charge of ensuring customers have a good experience.
In return for this level of personal oversight, though, you spend more time and money on warehouse and shipping. You must cover labor costs, pay for the location, and arrange for all the services needed for shipment. This can become costly, especially for a business that has cyclical or varying amounts of business.
2. Fulfillment Center
Want to outsource this work and much of the associated costs? A modern solution for e-commerce is to use a service that does the inventory management work for you. Fulfillment services receive your inventory in bulk and provide inventory management for a limited period of time. When your company receives an order, it’s communicated to the service, who pulls the goods and ships them.
Fulfillment centers are popular with smaller businesses because they take the onus of management off you. You can then focus on other areas of customer service. How much control you give up, though, depends on your arrangement with the fulfillment center. You may be able to negotiate choices in many areas, including shipping speeds and transportation vendors.
3. Warehouse Service
A warehouse service sounds like both of the above options, but it operates a bit differently. Warehousing is more about bulk storage over a longer period of time. Pallets of inventory can be stored for much longer than a fulfillment center allows. This is a cost-effective way to store goods for seasonal businesses, to prepare for delayed delivery, or to manage international shipments.
Many retailers also use warehousing to manage inventory levels at other facilities. You can stage goods at a warehouse to keep them inventoried and ready for deployment to smaller, less flexible, or more just-in-time shipping locations.
4. Drop-shipping
Drop-shipping isn’t for every business, but it works well for some. If you buy inventory product from another maker and don’t alter it within your own company, you can often arrange to sell those products to your own customers without the items actually being in your possession. You would notify the manufacturer (or a similar third party) of a sale and have them ship the goods directly to your customer.
Drop-shipping obviously can only be done when you don’t combine or change your inventory items from their original form. This limits its effectiveness, but it does allow you to save warehouse space and expense by effectively outsourcing physical storage. You would negotiate with the seller how to handle things like shipping and transportation to your satisfaction.
Can your company better utilize any of these inventory storage methods? Whichever style fits your business, you’ll be in a good position to streamline warehouse and shipping costs, provide good customer service, and manage your inventory.
Begin today with a call to Tri Star Freight Systems. Our warehouse and transportation specialists can help you assess your needs and find the best modern solutions, no matter what 2020 brings your way.
