What is Distributed Warehousing and How is it Beneficial for eCommerce Sellers in 2023?
It is difficult to recall a time when online orders would only be delivered after multiple weeks. Today, multiple companies and selling platforms claim to deliver their products on the same day and some even in hours. Premium users are usually given priority in this regard. On the technical front, orders are placed, immediate confirmation messages/emails are sent automatically, and the in-house staff gets notified about the order and packs the product instantly so the package can be ready for delivery within an hour but after this, the product has to get delivered to the customer.
It is can prove to be a challenging task to run. But there are sellers who, with the help of distributed warehousing, are providing same-day delivery and next-day delivery. In this blog, we will discuss distributed warehousing in detail, how it is helpful and how you can use it to lower your operating cost.
- What is Distributed Warehousing?
- 3 Types of Warehousing Models for Online Business
- Distributed Warehousing Vs Public Warehousing
- Why is eCommerce Moving Towards Distributed Warehousing in 2023?
- How WareIQ is the Best Option for Distributed Warehousing for eCommerce Sellers in India?
- Distributed Warehousing: FAQs
What is Distributed Warehousing?
Distributed warehousing is a novel kind of warehousing in which a company delivers and distributes products from a number of smaller, strategically-placed warehouses in major cities across the nation. The main objective of distributed warehousing is to take advantage of providing quick order fulfillment by storing inventory closer to customers. Additionally, this business model gives owners access to inventory and on-site requirements from virtually anywhere. Storage, fulfillment, cross-docking, retail distribution, on-site co-working, and other tasks are carried out in these warehouses.
Distribution warehouses are connected to particular distributors for particular items. For example, a laptop manufacturer would think about working with a distributor who represents computers and their peripherals. The distributor would keep those computers in its warehouse and ship them to the stores that would eventually sell them. The distributor may provide training or support for those laptops in addition to storing and distributing the goods. But doing so raises the manufacturer’s costs and lowers their profit margin. Unlike laptop manufacturers, a clothing manufacturer doesn’t need the same kind of support and pays less compared to a specialist distribution warehouse. Because of this, a key factor in deciding what kind of warehouse to use is the product type.
WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.
3 Types of Warehousing Models for Online Business
Single In-House Warehouse
Most new eCommerce companies typically rent one or two large, strategically situated warehouses and run their business independently. Although this conventional model has short-term viability, it is neither adaptable nor scalable. Finding and establishing new storage facilities will take time and work each time you try to increase your footprint. The strategy also attracts large fixed operational costs and calls for a significant amount of cash to invest in properties and long-term leases.
Additionally, because the warehouses are centralized, each shipment will have to travel a significant distance, delaying the completion of orders. On the other hand, you do have total control over warehouse operations with this arrangement. A big internal workforce will be needed to manage the warehousing procedures, but it helps to assure quality control. That’s where warehousing companies come into the picture, read more.
Decentralized Warehouses at Multiple Locations
As the name suggests, decentralized distributed warehousing means several warehouses are placed at multiple strategically chosen locations for easy operations, low costs, and proximity to transport hubs and areas of high demand. Read our blog on decentralized inventory to know how it helps eCommerce businesses in 2023. It will be easier to understand the benefits of distributed warehousing if you compare the pros and cons of decentralized warehouses with the conventional warehousing technique of centralized storage systems. Here are a few pros and cons of Decentralized warehouses:
- Lowers delivery costs
- Reduces delivery time
- Meets the high expectations of buyers
- Has higher successful delivery rates
- Is easy and cost-effective to return or exchange goods
- Eases distribution at batch level
- Requires a big team to operate multiple warehouses
- Needs huge investment and operational cost
- Has reduced efficiency without technology
- It can be complicated to operate
- Needs highly trained personnel
Outsourcing Storage to a 3PL
Growing companies should outsource their warehousing needs to a tech-enabled 3PL service provider. This approach delivers the advantages of distributed warehousing without the majority of its problems, making it the greatest method for streamlining fulfillment in general. While you do have to pay for shipping, fulfillment, and storage costs, you gain access to a larger network of sites without having to make a financial commitment to renting or purchasing those locations. Additionally, 3PLs provide value-added services including digital warehousing tools that automate SKU distribution and management as well as order processing and fulfillment.
Distributed Warehousing Vs Public Warehousing
The public warehouse option usually has fewer amenities than distributed warehousing but it is lower in cost. Some public warehouses may not include features like temperature control, pick and pack or a state-of-the-art inventory management system while others will provide one or more of these auxiliary services. Requirements for public warehouses include flexibility, affordability, and short-term contracts that might not be possible with distributed warehousing. The best storage facility for your goods should be chosen after considering a number of aspects, such as price, time commitment, business model, product kind, and inbound and outgoing shipping requirements. Let us look at the differences in detail:
|Distributed Warehousing||Public Warehousing|
|Distributed warehousing is a type of warehousing in which a company delivers and distributes products from a number of smaller, well-placed warehouses in major cities across the nation.||Public warehousing consists of commercial inventory space that is owned by a 3PL company or the government and is rented out to other businesses for distribution and storage.|
|Distributed warehousing offers special features like WMS, IMS, real-time tracking, etc.||Public warehousing generally does not provide any specialized features.|
|It has a comparatively High Cost.||It has a relatively lower cost.|
|It provides a variety of fulfillment services.||It does not offer any specialized services.|
|It is not so versatile and comes with long term contracts to make prices cheaper.||It offers versatility, high affordability and short term contracts.|
|It can store all types of products.||It cannot store certain product types due to the lack of specialised features.|
|It offers strategically-located warehouses in multiple locations.||It mostly consists of single warehouses in specific locations.|
|It has better logistics connectivity with multiple options.||It has a rigid connectivity option.|
Why is eCommerce Moving Towards Distributed Warehousing in 2023?
Benefits of Distributed Warehousing in eCommerce
There are several benefits of distributed warehousing such as easy deliveries, high rates of successful deliveries, easy returns, etc. but the below points are the most important ones:
Customers care about the delivery time but they care even more about delivery costs. In a study, it is found that a staggering 80% of buyers chose free shipping over speedy shipping when given the option. In most circumstances, the distance traveled and the cost of shipping is directly proportional where the more the distance traveled, the more expensive the shipping will be. Distributed warehousing allows you to move inventory closer to customers, reducing average shipment distance and consequently, average shipping expenses.
Two-thirds of buyers expect 2-day delivery and again, more than 80% of consumers are more likely to make a purchase when 2-day delivery is an option. As a result, providing quick shipment is crucial to retaining current clients as well as attracting new ones. Distributed warehousing, unlike shipping from a single warehouse, promotes speedier shipping by keeping goods in fulfillment facilities that are practically closer to common order destinations. As a result, delivery times are shortened because the average distance that orders must travel is decreased. Businesses can offer 2-day delivery in this way without having to invest in pricey, accelerated solutions like air shipment.
Meets Customers Expectations
Customers these days look for an easy and convenient delivery experience and distributed warehousing allows a seller to meet these expectations. In cases of returns or exchanges, it is a win-win situation for both parties as the distance from the location to the warehouse is reduced. Oftentimes, buyers require their orders to be delivered as soon as possible and this is made possible due to distributed warehousing.
How WareIQ is the Best Option for Distributed Warehousing for eCommerce Sellers in India?
WareIQ‘s distribution and storage services can handle all aspects of inventory distribution if you are ready to expand your geographic reach efficiently and affordably. Along with our expanding fulfilment distribution network that consists of multiple fulfilment centres and dark stores across the country, WareIQ uses its warehouse management system (WMS) and logistical know-how to help you scale your business more effectively and with less effort.
As a 3PL distribution partner, WareIQ provides optimized recommendations for the warehouse where your products should be kept to increase supply chain effectiveness. The order is instantly forwarded to the nearest warehouse to the customer as soon as it is placed. Order processing, fulfilment and delivery are then handled by WareIQ, freeing up your team to concentrate on the more important objectives of your business.
Through a single dashboard, you can even keep track of inventory levels in real-time across more than 12 eCommerce marketplaces and it offers complete visibility into warehousing costs, transit times, and other statistics. For brands that require assistance managing inventory in real-time, decrease picking, packaging, and shipping errors, and want to scale with ease, WareIQ has a best-in-class warehouse management system (WMS).
- Pan India Fulfillment & Darkstore Network: Plug-and-play fulfillment infrastructure with no minimums, which is compliant with Amazon Seller Flex, Flipkart Assured, Myntra and other marketplaces
- Inventory & Network Planning Excellence: Best-in-class AI models for sales forecasting, product segmentation, and inventory management to reduce inventory by 40% and increase revenue by 10%.
- Vertically Integrated Fulfillment Tech Stack: Our Fulfillment Tech Solution supports integrations with 20+ top marketplaces & D2C platforms, and prominent national, regional and hyperlocal couriers, enhancing reach by covering deliveries for 27,000+ pin codes
- Supply Chain Productivity Applications: Integrate a host of supply chain productivity apps with a single-click to your existing CRMs, ERPs & accounting software to manage your logistics workflows from one command center. Use Apps like RTO Shield to get 100% RTO protection, Branded Tracking to turn your order tracking page into a profitable marketing channel, and many more.
Trusted by 300+ top Indian brands, we are helping them accelerate online sales and expedite their growth through a synergistic combination of advanced technology, robust fulfillment infrastructure & seller enablement services!WareIQ is backed by leading global investors including Y Combinator, Funders Club, Flexport, Pioneer Fund, Soma Capital, and Emles Venture Partner.