Storing your inventory in your garage or the extra space inside your home will work in the early stages of your e-commerce business. However, as your business grows and you have higher demand, you need more space.
This is where e-commerce warehousing comes in. This storage solution will help you keep up with rising demand and scale your business comfortably. Here is everything you need to know about e-commerce warehousing and how it can support growing online demand.
What is E-commerce Warehousing?
E-commerce warehousing is the practice of organizing and storing inventory in a physical warehouse before it is shipped to customers. It is a necessity for any growing e-commerce business that needs a smooth, cost-effective supply chain workflow. A solid e-commerce warehousing operation lets you know what you have in stock, what products need to be replenished, and which ones are in high demand at any given time.
Challenges in E-Commerce Warehousing
While countless e-com companies have successfully mastered e-commerce warehousing, certain challenges make this critical aspect of business success tricky. Here are some to look out for.
Shipping delays
Shipping delays affect each end of the supply chain. Your manufacturer may not ship your products on time, or there may be delays with outbound orders from your warehouse, causing customer dissatisfaction. A well-structured e-commerce warehouse reduces the occurrence of outbound shipping delays by maintaining solid inventory management and reducing the time workers take to pick and pack orders.
This is possible with the use of a warehouse management system (WMS) like Da Vinci that provides businesses with advanced, scalable, and data-driven solutions to manage warehouse operations.
Poor space management
When a warehouse isn’t well-organized, problems accumulate: items piling up in random places, overcrowding, misplaced stock, or lost inventory. These issues make workers spend more time finding things, which increases labor costs and slows down the whole operation. This can be managed by modifying storage layouts in a way that makes sense for the business.
For example, high-demand goods should be placed near the packing station, and hazardous items should be properly stored according to OSHA standards for easy movement. Other strategies are vertical stacking, the use of Automated Guidance Vehicles (AGVs), which are small robots that carry items around the warehouse, and Automated Storage and Retrieval systems (AS/RS), which are robots to find and retrieve items for workers. By leaning into these solutions, businesses can scale comfortably without needing a bigger space or more workers.
Manual picking process
When done manually (workers walking long distances across the warehouse to locate items for each order), picking can take too long and can lead to errors. Using a smart WMS like Da Vinci with advanced picking solutions can help workers pick items faster and without errors. This software leads workers to the right inventory to be picked using the fastest route.
Inventory inaccuracy
Inventory inaccuracy happens when the records don’t match the inventory in the warehouse. This could be due to human or system errors or operational inefficiencies. Either way, it can cause financial losses and disruptions for business owners. Using an advanced WMS with an automated inventory management feature will help keep track of what is available and what needs to be restocked in real time.
High order volumes
Peak sale periods like Black Friday can be challenging as warehouses process a large number of orders within a deadline. Using a comprehensive WMS can help workers track, manage, and organize orders and prepare them for shipping. If you need to hire more workers during this period, an easy-to-use WMS like Da Vinci means they can start working right away.
E-Commerce Warehousing Strategies
Here are some of the best strategies to follow for your e-commerce warehouse.
Demand Forecasting
Predicting future customer demand helps maintain optimal inventory levels while avoiding stockouts or overstocking. Here’s how to predict demand:
Leveraging historical sales data
Analyze past sales trends to predict future demand. For instance, an online clothing retailer might see spikes in winter coat sales during November and December, prompting pre-season stocking. Historical data also reveals seasonal patterns, product life cycles, and promotion impacts.
Track market trends and consumer behavior
Market trends help align inventory with customer preferences. If reusable water bottles gain popularity, an eCommerce store can stock diverse styles and colors to meet demand.
Use AI forecasting tools.
Advanced forecasting tools that use machine learning and AI can combine historical data, market trends, and even external factors like economic conditions or competitor activity to, say, predict increased demand for a specific product line due to an influencer endorsement on social media.
Optimize the Layout
An optimized warehouse layout reduces movement and picking time and improves storage efficiency. Organize items based on demand frequency using vertical storage and zone-based layouts. Placing high-demand items near shipping docks reduces retrieval time and speeds up order fulfilment.
Workforce Upskilling
Training employees to handle advanced technologies like WMS increases productivity and accuracy. Staff learn to use RFID scanners and sensor-equipped forklifts to reduce inventory tracking errors. Upskilling also prepares workers for automation—when implementing robotic picking systems, employees can learn to program and maintain the robots.
Warehouse Automation
Automating repetitive tasks like picking and scanning speeds up order processing while eliminating errors. Systems like robots, conveyor belts, and AGVs are essential in modern e-commerce warehousing. Amazon’s Kiva robots bring shelves to workers, eliminate long walks, and boost productivity.
Inventory Management
Effective inventory management ensures product availability while minimizing carrying costs through real-time tracking, just-in-time (JIT) practices, and smart replenishment. WMS, like Da Vinci, provides instant inventory tracking, enabling timely reordering decisions.
Best Practices for E-Commerce Warehousing Success
Let’s look at some best practices for e-commerce warehousing management.
Invest in an E-Commerce Warehouse Management Software
An e-commerce warehouse management software is designed to streamline your warehouse operations. This tool helps automate and organize various warehouse activities for better efficiency. A typical e-commerce WMS usually has the following functions:
- Tracks activities throughout the warehouse
- Takes note of stock levels and updates information in real-time
- Provides inventory forecast so you know which stock may run out soon
- Streamlines and automates picking, cross-docking, packing, putaway, etc., for better efficiency
- Integrates with your online store and other necessary tools.
Be sure to choose a WMS that is powerful, scalable, and sophisticated enough to manage your business needs as they evolve.
Da Vinci Unified is an e-commerce WMS with advanced features that help your workers work smarter and solve complex issues. From picking to directed putaway, this software provides custom solutions that fit your business needs.
Organize Inventory Logically
Grouping similar products together makes it easier to locate items and reduce errors. For example, if you sell electronics, all smartphone accessories like cases and chargers should be stored in one section, while laptops and their accessories are kept in another.
You can also organize inventory based on demand levels using the ABC inventory method:
- Group A: High-demand items stored closest to the picking and packing area for easy access.
- Group B: Moderately demanded products kept slightly farther away.
- Group C: Low-demand items stored in less accessible areas.
This logical arrangement reduces unnecessary movement, speeds up the picking process, and improves overall warehouse efficiency.
Optimize the Warehouse Layout
Start by designing your warehouse to ensure a logical flow of goods, from receiving to shipping. High-turnover items should be stored near the packing stations, while bulk storage areas can be placed farther away. Group clothing sizes (S, M, L) together by clothing type (e.g., shirts, pants, jackets) and place the most popular groupings near the entrance of the picking zone.
You can use the pick-and-pack strategy, where employees pick products and pack them in one seamless process to avoid moving items between multiple stations. Ensure you have clear signage and wide aisles for easy navigation and to reduce the time spent searching for products or maneuvering equipment.
Automate Where Possible
Automation reduces low-throughput manual tasks and errors. Barcode scanners, for example, ensure accurate tracking of inventory during receiving and shipping. When a product is scanned, its location and status are updated instantly, preventing misplacements or oversights.
Larger warehouses should consider robotic picking systems. An automated conveyor belt system can transport products from storage to packing areas.
While full automation might be too expensive initially, even partial adoption, like handheld scanners, inventory management apps, or setting up automated alerts for low-stock items to trigger replenishment, can make a significant difference for small to mid-sized businesses.
Manage Returns Properly
To ensure that the growing percentage of goods being returned by today’s consumers doesn’t disrupt regular operations, consider adding a dedicated returns area to the warehouse.
When a customer returns a pair of shoes, the product is directed to the returns area for inspection and restocked immediately for resale. Create clear policies and workflows for inspecting, repairing (if necessary), and restocking returned items to reduce delays.
Also, the data from returns is very important. For example, suppose customers keep returning a specific product due to sizing issues. In that case, you should adjust the product description on your website to include more detailed sizing information, reducing future returns.
FAQs
Do you need a warehouse for e-commerce?
Whether you need a warehouse depends on the scale of your business. Small businesses can store inventory at home or use third-party fulfilment centres. However, as your business grows, having a dedicated warehouse can help manage larger inventory, streamline operations, and improve order fulfilment speed.
What is ecom warehouse?
An e-commerce warehouse is a storage facility designed to house products sold through online stores. These warehouses help facilitate efficient inventory management, picking, packing, and shipping. They often use technology like barcode scanners and warehouse management systems to ensure smooth operations.
What is ecom logistics?
E-commerce logistics is the entire process of managing and moving goods from the supplier to the customer. It includes inventory storage, order processing, packaging, shipping, and even returns management.
Grow Your E-Commerce Business with Automated Warehousing
E-Commerce warehousing has many benefits for businesses scaling rapidly. Automated warehousing keeps you ahead of the competition in a fast-paced market. By leveraging automation tools like an e-commerce WMS, barcode scanners, and robotic pickers, you can streamline operations and reduce errors.
Da Vinci is an e-commerce WMS with advanced features that help your workers work smarter and solve complex issues. From cartonization to cross-docking, picking, and directed putaway, this software provides custom, scalable solutions that fit your business needs.