A shipping warehouse is a place to hold unsold inventory. This guide shares how they work and whether you need one for your retail business.
A shipping warehouse is a place to store unsold inventory. Instead of cluttering your retail stockroom or overwhelming customers with too many products on the shop floor, the warehouse acts as a designated place to hold excess inventory.
Shipping warehouses also play a key role in the supply chain by using them as mini distribution centers. If a customer places an order through your online store (or pays for their order in-store and agrees to deliver at a later date), you don’t need to fulfill orders at your retail location. Your warehouse team can manage the logistics of your shipping, leaving your retail team with more time to do what they do best: serve shoppers in-store.
If you’re unsure on how to incorporate warehouse shipping into your retail strategy, fear not. This guide shares what shipping warehouses are and how to manage them—even with a list of services to consider if you want to outsource the entire process.
Why are shipping warehouses important?
Shipping warehouses are where your inventory is stored before it arrives at your retail locations. It’s also a place for online-bought inventory to be picked, packed, and shipped to a customer once they’ve placed an order.
How you operate your warehouse significantly impacts the experience someone has with your brand. Consumers expect ultra-fast delivery, with retailers like Amazon paving the way for even quicker delivery times (sometimes within the day). Warehouse shipping allows you to quickly fulfill orders and partner with shipping carriers to get your orders there fast, which opens the door for happy customers to place repeat orders.
Our survey found that 34% of retailers underestimated the cost of shipping when starting their own business. Shipping accounts for just under 9% of the average business’ first annual expenses, but a smart warehouse shipping strategy can help reduce these costs, especially if they’re located nearby major transportation hubs or cities where your customers are.
Suppliers also often offer a lower price per unit when you buy in bulk. Although warehousing means extra costs to keep the new facility running, it can work out more cost-effective because you can lock in bulk discounts with suppliers and have a safe space to store inventory.
Inventory shrinkage costs retailers an estimated $142 billion per year. Instead of storing and shipping items from your retail stores, a warehouse offers greater security. You can hire a dedicated team to track inventory in your warehouse, conduct regular cycle counts, and ensure that the general public don’t shoplift from your store. Only approved warehouse staff can access your stock.