My First Warehouse: eCommerce Companies Open First Warehouse in Record Numbers

Amazon.com owns nearly half of the eCommerce market share in the United States.  There is no doubt this giant enterprise has done much to set the expectations of the consumer, particularly on how quickly product should arrive at their doorstep.

Amazon notwithstanding, tens of thousands of small e-commerce businesses are thriving throughout North America. In the retail age they would have been boutiques offering unique, unusual, and one-of-a-kind products to customers. In the online age, these boutiques are discovered via keywords through Google or Bing searches.

From specialty sporting goods to fashion, from food to items for toddlers, e-commerce companies are starting up every day by creative entrepreneurs. With cloud shopping sites like Shopify.com, It costs little to set up that initial website and promote the product. While 90 percent of these businesses hobble along, some thrive and grow to multi-million-dollar enterprises.

The core competency of these new businesses is invention, marketing, public relations, promotion, and a few are developed by web and internet savvy people. But rarely is warehousing competency in their toolbox of skill-sets.

What started in a garage, a shed, or even at a kitchen table (housing low production runs of inventory sold on these websites) is now ready for the next step: opening the first warehouse. Often the first attempt at a warehouse will not meet with success. Avoiding these missteps, mistakes, and problems is based on one concept.

Don’t buy parts… Buy answers

Any fast-growing e-commerce entrepreneur can buy racks, conveyors, and overhead doors. How to arrange those parts for maximum efficiency is where the guessing starts. A better approach is to hire a warehouse expert to teach first-time warehouse owners how to treat a company warehouse as a competitive advantage and design it accordingly.

By using an expert in logistics, efficiency, engineering, and to use the best practices such a team can develop, it creates a secret weapon against the competition. More sales does not garner more profits if a first warehouse is poorly designed. Working harder to make and ship more product at a lower profit defeats the purpose of running a business. Avoiding the costs of the first warehouse pitfalls is money well spent.

US warehouses are costly and hard to come by, as e-commerce demands pick up

Nationwide, the industrial vacancy rate is 5.3 percent, a 17-year low, according to JOC.com’s data hub. eCommerce fulfillment is a big reason why the demand for warehouses and distribution centers have increased of late; eCommerce represents about 40 percent of the leasing of industrial properties today. In states that have legalized marijuana, industrial space is also in demand by growers, reducing inventory further.

Companies hoping to secure more warehouse and distribution space are going to run into steeper prices, with fewer options to pick from in the future. Industrial rents were up 8.2 percent in 2017, after increasing 8.7 percent in 2016.

The need to get the first warehouse correctly established becomes even more critical in under these market conditions