Houston, Texas

Warehousing is one of the most crucial aspects of running a thriving ecommerce business. Whether you have outgrown your current warehousing, or are looking into getting into ecommerce, this article is for you.

Table of Contents

What is ecommerce warehousing?

Ecommerce warehousing is the practice of storing your products/goods until they are ready to be shipped out to end users. Some ecommerce warehouses are owned by the DTC ecommerce companies themselves, while most use the services of 3rd party warehouses/fulfillment centers. Many 3rd party ecommerce warehouses offer additional services beyond storage, including picking, packing, & shipping. And a few flexible 3rd party ecommerce warehouses, such as Cimsuppliers 3PL, offer certain value-added services based on each client’s specific needs.

What are the top warehousing options for ecommerce companies?

Purchasing a warehouse

Purchasing and running your own warehouse is a costly enterprise and doesn’t interest most ecommerce companies. However, if you are a large, established company that wants to do all their fulfillment in-house to maintain full control and flexibility, while also wanting to add some real estate assets, this might be the way to go. Purchasing a warehouse is also a viable option for companies that manufacture their own products. However, such companies must be cognizant of the costs of setting up, staffing, and maintaining the warehouse. For a large number of 3PL’s the costs of warehousing and labor for the warehouse are their largest expenses.

Leasing a warehouse

Leasing a warehouse is a more viable option for medium ecommerce companies than purchasing one, but it still does not provide the cost and time savings that other options do.

On-demand warehousing

On-demand warehousing lets ecommerce companies rent out smaller shared warehouses on short-term leases(monthly.) This is an option for seasonal/event sales, but it is usually not a long-term solution because of the higher overall pricing compared to a larger warehouse and difficulty in setting up the logistics of such a place correctly. Examples of on-demand warehousing are ReadySpaces and CubeWork.

Working out of your home

This is how most DTC ecommerce companies begin their journeys, and is usually the most cost-effective solution for small companies since there’s little to no overhead costs. However, most growing ecommerce companies soon find it is not viable for people to continue shipping orders out of their homes because of increased volume, shipping mistakes due to lack of expertise/human error, or having to pay higher than average shipping prices for purchasing label(due to shipping carriers not providing discounted rates.) A major hindrance of working out of your home is the amount of time you spend fulfilling orders, which takes away time you could spend on growing your business. This also usually results in a messy kitchen.

Outsourcing to a 3PL/Distribution center/Fulfillment center

A 3PL company has warehouses that are designed to provide their ecommerce and retail clients the services they need without having to invest in a warehouse or staffing. 3PL’s such as Cimsuppliers allow you to access their resources(warehouses, labor, equipment such as forklifts, etc.), contacts(with carriers, freight forwarders, etc.), and expertise to fulfill your orders as efficiently as possible. On average, using a 3PL is the most cost-effective, time-saving, and logistically conducive solution for most ecommerce companies.

3PL’s such as Cimsuppliers allow you to access their resources(warehouses, labor, equipment such as forklifts, etc.), contacts(with carriers, freight forwarders, etc.), and expertise to fulfill your orders as efficiently and as possible. On average, using a 3PL is the most cost-effective, time-saving, and logistically conducive solution for most ecommerce companies.

Which one should I choose?

These are not definitive guidelines, but general rules of thumb:

If you have less than 500 orders per month

Fulfilling your orders by yourself would probably be the most convenient solution for you.

If you have between 500 and 10,000 orders per month

Using the services of a 3PL, especially those without hefty set-up fees, would be ideal for you.

If you have 10,000 or more orders per month

Using the services of a 3PL, especially those who provide top-notch performance, service, and competitive pricing, would be ideal for you.

If you are a large ecommerce/retail company: 

Depending on your long-term goals, you can either go with leasing/purchasing a warehouse and setting up your own fulfillment center, or you can get in touch with a 3PL and compare the pros and cons of using their services compared to building your own warehouses from scratch.

How much do they cost?

Purchasing a warehouse:

For accurate pricing you can check out warehouses for sale in your city on websites such as Loopnet. Based on a quick search in the city of Houston we can find warehouses from 1,300 square ft. selling for $170k to an 87,000 square ft. warehouse on sale for $17.5 million.

Leasing a warehouse

For accurate pricing you can check out warehouses for lease in your city on websites such as Loopnet. Based on a quick search in the city of Houston we can find warehouses from anywhere between $1000/month for small shared ones to large ones going for $100,000/month or more.

Using the services of a 3PL

You can check out our fully transparent prices of Cimsuppliers on our pricing page by clicking here. Or you can check out this article we wrote comparing the pricing of a few different 3PL services.

In-house fulfillment

Generally doesn’t cost anything, unless you’re hiring labor.