An answer to Amazon: The secret of dynamic warehousing

By Oleg Mikhailenko
Published in Solutions
July 09, 2022
4 min read
An answer to Amazon: The secret of dynamic warehousing

When writing any kind of posts for a warehousing blog, it’s hard to ignore the impact of one singular company on the industry. This company has changed the face of ecommerce warehousing and fulfillment like none other, and has made its former CEO one of the richest people on the face of the planet. We’re of course talking about Amazon, whose offering of two-day delivery and the lowest prices on thousands of everyday household items has made it so intimidating to other sellers that many of them never begin their ecommerce journey in the first place, thinking that it’s pointless to try to compete.

We’re here to tell you that that’s false. With new innovations in industry technology and strategy, anyone can make it in the wide world of ecommerce selling. Read on for a quick overview of existing strategies for all warehousing companies, a new strategy that might help you along your way, and how you can implement these procedures in your own business.

The main three warehouse strategies

In-house

In-house fulfillment is exactly what it says on the tin— the merchant themselves handles all aspects of the internet sales/e-commerce fulfillment process without relying on any third-party or dropshipping partners. Many sellers start out this way, especially if they’re making and selling products they’ve designed and manufactured themselves. What does a warehouse look like in the in-house model? It looks like your garage, or your kitchen table. It can seem easy to devote a small portion of your house or office space to the packing and labeling of products. As long as one has the space to store mailing envelopes or boxes, shipping labels, and any other necessary items, anyone can do it. However, in-house distribution and shipping can take up lots of valuable time. Many sellers find that once their business has grown big enough, most of their day is spent packing and shipping goods. Time spent on this can’t be spent on developing new products, improving marketing, or customer service. Merchants are left facing the dilemma of whether to hire additional staff to pack their goods at no small expense, or outsourcing to third-party warehousing and storage companies. However, the control an e-commerce company has over their orders is almost complete using this method. The only thing out of your hands is the occasional interruption in inventory, shipping supplies, or delivery, making this an especially customer-friendly fulfillment strategy.

Third-party

When a merchant hands off their orders to a third party company, it often means the seller initially was doing the work themselves, but their business has grown to such a degree that continuing to fulfill all orders single-handedly has become unsustainable. Instead of building your own distribution infrastructure, which can be time-consuming and expensive in its own right, you might eventually choose to bring in someone else. Each and every third-party distribution company is different, offers different warehouse sizes and locations, and many offer perks such as packing services, temperature control, or prep for FBA orders. These companies also often have their own dedicated online order fulfillment warehouses. It’s important to research these companies beforehand, though— customers may be unaware that you don’t handle distribution yourself, and can misdirect their frustration with the delivery process onto your business, when in actuality it was completely out of your control. For this reason, it’s paramount that you fully research any third-party distributors before committing long-term.

Dropshipping

Dropshipping is an incredibly popular omnichannel fulfillment strategy for new and veteran sellers alike. Like with third-party, there’s no need for a seller to develop their own e-commerce fulfillment system from scratch. Unlike third-party, however, the merchant never even lays hands on the products being sold. Instead, requests from your online storefront are routed directly to a wholesale manufacturer, which handles everything from product development to packing to shipping the product directly to your customer. To grow and expand your business, all that’s needed is to scale your marketing efforts and add new products to your shop. Your dropshipping partner takes care of everything else. However, you have to vet your partners carefully. If they deliver too slowly, or provide poor-quality or even the wrong products, all the heat from your customers will fall back on you instead. As mentioned before, customers are seldom well-informed about distribution strategies and whether something is or isn’t entirely your fault. All they care about is their overall satisfaction.

Dynamic storage- the new wave

A dynamic warehouse network is a peer-to-peer network marketplace for warehousing and fulfillment services. Dynamic warehousing, also known as random location, means that items don’t have a predetermined warehouse location. Instead, they’re placed wherever there happens to be spare room on the rack. This allows warehousing networks to be scaled and expanded alongside demand. Unlike Amazon, who has to build new warehouses and facilities in order to scale further, people making use of the dynamic model can simply rent out additional warehouse space from other providers. Dynamic warehousing nets are especially insulated from variability for this exact reason.

In conclusion

If you’re looking to connect with a dynamic warehousing network of your own, look no further. We here at P2Pseller pride ourselves on servicing businesses of every size, and connecting them to the perfect warehousing and fulfillment companies for their unique needs. With us, you don’t have to worry about even half of the things listed above or pore over a warehouse startup checklist. Instead, we handle all the finer points for you so all that’s left to do is arrange the delivery of goods to your distribution partner. That leaves more of your focus available to spend on the parts of your business that really get you excited. Sign up for a P2Pseller account in just a few clicks to browse our offerings with zero stress, zero phone calls, and zero hidden fees.


Tags

#fulfillment#dynamicwarehousing#amazon#tips
Previous Article
How to support your small business with 3PL fulfillment

Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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