Key Things to Consider When Hiring a Storage Management Company for Your E-Commerce Business

If you are running an e-commerce business, then chances are that you are looking for ways to optimize your space. You may be thinking of ways to reduce the cost of your storage management company or even outsource it entirely. But if this is your first time outsourcing any aspect of your business, then there are some key things you should consider before doing so.

Determining the Storage Capacity You Will Need

One of the most important things to consider before outsourcing a storage management company is your required inventory capacity. Generally, you should allow an additional 10% for seasonal fluctuations and unexpected damages that may occur during shipping or transit. 

As part of this process, it’s important to do an inventory audit of all your products and determine which ones are still in stock and how much is left in each location.

Once you have determined what storage capacity is required based on your current inventory levels, it’s time to calculate how much space will be needed at each location. If a product takes up more space than average, then more space must be allocated for them when calculating total storage space requirements across multiple warehouses or facilities.

It’s also necessary that a storage management company be able to handle returns efficiently since these can quickly pile up over time if not properly managed. In addition, returning items can take quite some time, depending on where they were sent back from originally.

It means there needs to be enough room within their warehouse facilities so that new orders are not held up because someone hasn’t returned their old stuff. On the other hand, it could mean lost revenue for both parties involved.

Calculating Shipping Costs

Calculating shipping costs can be an overwhelming task for any business. Shipping costs depend on the product’s weight, the distance between the warehouse and the customer, the size of the package, and the mode of transportation. If you’re looking to provide a competitive advantage over other sellers, one way to do that is by offering free shipping on orders above a certain amount.

However, offering free shipping can be costly because you may not have the option of setting your prices if you’re selling on marketplaces. In this case, it’s necessary to know how much it costs to offer free shipping.

Fast and Timely Delivery

If you’re like most e-commerce business owners, your key concern is customer satisfaction and retention. One way to ensure that customers are happy with your products is by offering fast shipping and delivery times. The quicker a customer gets his order, the more likely he’ll be happy with the purchase. When they get it quickly enough, they may even be inclined to make another purchase from you in the future.

It can be especially crucial if someone has ordered something that requires processing time before shipment. In this case, the customers might become frustrated if their order never arrives or arrives after an extended period due to processing delays or other issues related to getting it ready for shipping. According to data, around 44% of Europeans back out of shopping due to slow delivery time.

However, by hiring an expert storage management company, merchants can reduce these delays by storing inventory at their facilities until it’s ready for shipment.

Security of Your Inventory

How you protect your inventory depends on how much you have at any given time. If you are a small business with only $50 worth of goods, then there is no real need for insurance or security because the loss would be negligible. However, if your store is selling thousands of dollars worth of products at any given time, then it becomes imperative that you take precautions.

There are about 10,04,873 finance and insurance companies currently operating in the US. The industry has seen an increase of 0.7% in 2021. The increasing trend in the industry shows that people are getting aware of the benefits of insurance. However, the figures also indicate that many are still lacking behind in having adequate security.

Security systems are one of the most important things to consider when outsourcing storage management services. A proper system protects against theft and fire damage while also monitoring employee activity and inventory levels so that they can be adjusted accordingly based on current sales figures.

Managing Pick, Pack, Ship, and Returns

You should find a storage management company that manages your pick, pack, and ship process. It means they would be capable of managing the inventory in your warehouse and also sending out orders to customers on your behalf. The outsourced storage management company should also be able to manage returns, another vital aspect of the business that you need to consider.

It was estimated that of approximately $4.5 trillion in online sales in 2021, nearly 16.6%, i.e., $761 billion, was returned by consumers in the US. With calculating your share in the returns, you must choose the management company that can handle the returns appropriately.

Finally, ensure that a detailed report is provided to you at the end of each month detailing how much inventory has been used during this period so you can keep track of it.

Providing Order Related Customer Service

The most significant factor in choosing a service provider is customer service. In other words, do they have an established process for handling customer complaints and issues?

It’s necessary to choose a vendor who provides order-related customer service. They should be able to answer questions about the product, and shipping logistics, like estimated delivery times and methods, billing information, and any other concerns you may have about your purchase. Your storage management company should also be able to help you with returns if needed.

Connectivity to Your Current Systems

Before outsourcing the storage management of your business, make sure that the company you choose is connected to your current systems. If not, a lot of time and money could be wasted on data syncing issues. 

You must also ensure that any new system can connect with the current one. It will prevent errors in the long run and save you from having multiple manual transfers between systems to avoid mistakes in transferring data.

Finally, you must ensure that your new storage solution is easy to use. It will prevent unnecessary employee training time and save you from paying extra money for ongoing support services after the initial installation.

The Solution You Choose Will Depend on What You Want to Outsource

The solution you choose will depend on what you want to outsource. Do you have a large number of items that need to be stored? How often do they need to be moved around? Are there any restrictions on shipping or delivery methods and times? How long do you want your goods stored before being picked up or delivered again?

These are all important questions when deciding which storage management company is right for your business. 

A good example would be if an e-commerce store owner wanted his/her products shipped internationally every month but only wanted them kept in storage for one year before being shipped again. This complexity would require multiple companies to work together for their task management system to work properly.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.