What is Warehousing & How Does it Work?

What is Warehousing?

Warehousing is when you fulfill your own orders with your own inventory, stored in your fulfillment center(s). It’s another way of describing self-fulfillment.

How Does Warehousing Work?

When a customer orders one of your products, that order is assigned to one of your fulfillment centers – preferably the one closest to your customer’s shipping address. (If you are a small business with only one warehouse, then it is processed there).

Fulfillment centers are located all over the country. It’s a smart idea for your warehouse(s) to be closer to your customers than to your business, in order to minimize shipping costs.

Each order is processed, packaged, and shipped out of your warehouse by your own staff. Unlike drop shipping, no third parties are involved in the fulfillment process. This is why warehousing is considered to be self-fulfillment.

The Pros & Cons of Warehousing

Generally speaking, warehousing eliminates the need for third party logistics. It can also allow for greater profit margins, because you don’t have to deal with the same terms and conditions related to processing that drop shipping agreements include.

However, the biggest cons are space and location. Unless you have the space to store, package, and ship all your products, self-fulfillment is going to be impossible. For smaller stores with smaller sized items, this might not be as much of an issue; but for large to oversized products, it’s a critical obstacle to overcome.

Labor and operational costs are another key factor. You’ll want to make sure you have the resources to maintain successful warehouse operations. This is especially important for brands that sell repeat products, as the order fulfillment process can be a huge influence in a customer’s decision to continue doing business.

Reader Interactions


  1. says

    I have a small business, and I am looking for a warehousing service to “host” my goods. For me, the biggest advantage of it is that it can allow for greater profit margins because I don’t have to deal with the same terms and conditions related to processing that drop shipping agreements include. I believe that space and location will not be a big issue for me as my items are small. I appreciate your advice to make sure I have the resources to maintain successful warehouse operations, and I will do my best to eliminate the need for third-party logistics in such a way.

  2. Pancho says

    I think it’s a great idea, and investment to have your own warehouse, or fulfillment center. It makes it easier for you and your company by getting rid of any 3rd party, letting you do your own shipping and storage. Though not always easy to do, it is something to strive for in a business sense.

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