Tips for choosing a warehouse supplier for your retail business

January 12, 2022 Rachael Hirst

If you own a retail business, you may need to use an outsourced warehouse. If this applies to you, you will have to find the best way of identifying the most suitable third-party warehouse supplier. Here is some guidance that will help you make an informed decision.

1. Determine your current and long-term needs

You can save time and resources by considering both your existing and long-term warehousing needs. Here are some of the services you may need today or in the near future:

Your products may need to be stored for a definite time period. Potential suppliers can offer various types of storage options so choose carefully.
Your products may need to be kept in storage in cross-docking until all your orders are consolidated and ready for delivery.
Your products may need to be placed in pallets to make handling and storage easier.
You may want your products organised in specific groups, such as Stock Keeping Units (SKUs).
Your products should be labelled for easy shipment.
When a warehouse receives your orders, the products may need to be retrieved and packaged for shipment (pick and pack).
Your products can be shipped to you or your customers (onward distribution).
If the product package is not suitable, the warehouse will repack it.
The warehouse can pick your different products and apply tickets based on your instructions.
The supplier can receive your customers’ orders and fulfil them for you.
Some warehouses can receive and handle returned products for you.

2. Identify the technology requirements of your business

Your potential warehouse supplier must meet your technology requirements, such as:

Mode of communication
Regular inventory updates through SKUs
Ability to receive orders directly from your online store

The potential outsourced supplier should inform you about their Warehouse Management System (WMS) so you can:

Understand its capabilities in terms of your current and future roadmap
Determine whether your systems are compatible
Check that it works with your software
Determine whether it works with your marketplace platforms, such as Amazon and Shopify

3. Set your warehousing budget

Remember, storing products, fulfilling and distributing customer orders, and managing returns all entail costs and affect your profit margins. It is therefore crucial that you understand the primary service you need as well the required budget. This will help in your negotiations with potential suppliers.

4. Identify your preferred location

Your preferred location will often dictate the warehouse and supplier you choose. You may be able to fulfil your orders using just one warehouse. However, limits on cost and time may require the use of two facilities or more if you want to meet all your company’s needs.

Do you need a freight forwarder?

You may also need a third-party freight forwarder if you are outsourcing your warehousing functions. According to Good Logistics, there are five reasons why this approach will make your shipping tasks a lot easier:

It reduces shipping logistics while giving you more time for other essential retail duties.
It gives you peace of mind as you won’t have to deal with complicated rules and regulations.
It allows you to make use of an expert’s knowledge and know-how.
A freight forwarder often has backup plans to prevent delays to your shipments.
You can obtain shipping discounts, especially if you ship large volumes and maintain an excellent relationship with the freight forwarder.

If your retail business needs warehousing and freight forwarding, it may be a good idea to obtain these two services from a single supplier.

You need to visit and inspect the warehouse physically

The best way of determining a warehouse’s suitability is to visit the facility yourself as you will then be able to assess the suppliers and their standard operating procedures.

Don’t let a professional-looking website lure you into a false sense of security. Before signing a contract, visit the warehouse in person and observe how the staff work, communicate and interact. Ask questions regarding their processes, especially in relation to storage, fulfilment and security. Also consider the following areas:

Availability of storage and suitability of the facility for your products
Standard operating hours, including bank holidays
Possible integration with the supplier’s warehouse management system
Any value-added service offers
An order’s average turnaround time
Courier or delivery policy
Any products or orders that cannot be delivered from their location
The facility’s security procedures
Ability to work with marketplace platforms, such as Amazon and Shopify

If a physical visit is not feasible, check to see if there are any reviews about your potential supplier, especially recent and up-to-date posts.

Conclusion

The success of your retail company may depend on your collaboration with a suitable warehouse partner. Before choosing a supplier, you need to understand your logistical needs, technology requirements, budget and location. It is possible that you may also need the services of a freight forwarder. If so, you should enquire as to whether your potential warehouse supplier also offers this service. Remember, it is essential that you physically visit the warehouse facilities to verify the accuracy of the company’s advertisements.