Whether you need to find a small warehouse for rent near me or you have multiple fulfillment centers across the USA, choosing the right warehouse location is essential. These are the top 6 factors for choosing the best warehouse locations for online distribution. By the time you’re done reading this, you’ll have a better idea of where to rent or buy warehouse space to improve your order fulfillment, reduce shipping costs, and keep your customers happy.
1. Know where your customers are located
As an online seller, you can sell products virtually anywhere. However, you may have noticed that many of your customers are located in a particular region. Therefore, choosing fulfillment center locations near target customers can help lower shipping costs and entice customers with fast delivery.
Looking at customer analytics to spot trends is the first step. You are likely to notice hotspots where you seem to get the most orders. For many online sellers, cities like New York, Dallas, San Francisco, and Washington D.C. get many orders since more people live there. However, if you sell specialty goods like surfboards or fishing gear, that can affect where orders ship to most.
It’s no surprise that renting warehouse space in big cities is expensive. But you can save money by picking a neighboring town or state where warehouse rentals and commercial warehouses for sale are cheaper. That allows you to take advantage of fast shipping and lower shipping costs by fulfilling orders close to where customers live without tossing hard-earned money out the window on a premium real estate.
What happens if your customers are widespread? This is a common problem for many online sellers. Multiple fulfillment centers or one centrally-located distribution center may be the best options in this case.
2. If you have multiple warehouses, think about how location affects sales
Most new online sellers only need one fulfillment center to get started. That can change as your business grows. More SKUs mean more sales, but also more complex distribution. This is where creative thinking comes into play.
If you have a lot of SKUs, you’ll need to allocate inventory in the most effective way possible to increase profit. Start by considering how the customer’s location affects what they buy. For example, winter coats usually sell best in cold regions, so it makes sense to store them in nearby warehouses. This will reduce shipping costs, and customers will be thrilled by fast shipping.
3. Consider who you will hire and how much it costs
Hiring good warehouse workers to make running an online business smooth. Wherever you choose to locate the warehouse, it is the locals that you’ll be hiring for warehouse jobs. Large cities can make hiring warehouse workers easy since you have a vast pool of workers to choose from, but warehouse space in cities can be costly. Renting in low-cost neighborhoods or just outside the target city can save money.
Another factor to consider is the local wage. Big-city workers expect higher pay than workers in other parts of the country. Also, if you will pay the minimum wage, what is the state minimum wage there? These are all factors to consider when choosing warehouse locations.
4. Store slow-moving inventory in central locations
If you have multiple fulfillment centers, it makes sense to have best-selling products in stock at various locations. This allows customers in different regions to get fast, cheap shipping. Meanwhile, slow movers can be allocated to central warehouse locations since there is no need to stock them at every location. Doing so can reduce storage costs and inventory costs substantially.
5. Find out where competitors have warehouses
When thinking about warehouse locations, you can use the position of a competitor’s distribution centers as a guide. For example, big companies like Amazon spend a lot of time and money deciding where to open Amazon warehouse locations to maximize profits. They have done all the legwork by analyzing the cost, pros, and cons of each Amazon fulfillment center.
Keep in mind that the best warehouse location for you might not be the same as a vast online retailer like Amazon. While analyzing competitor’s locations might clue you into the most popular areas for fulfillment centers, you shouldn’t base the decision solely on what your competitors are doing.
In fact, sometimes, the opposite is true. Perhaps your biggest competitors have distribution centers in every area of the country except the Pacific North West. But sales numbers show that you receive many orders in that region. Renting or buying a warehouse where your competitors aren’t located may give you a leg up if you can offer faster and cheaper shipping to customers in that region than your competitors can.
6. Consider hiring an online fulfillment center to handle orders for you
If buying or leasing warehouse space is too costly or confusing, all hope is not lost. Third-party fulfillment centers give you access to geographically desirable warehouse locations without tying up all your investment money in overhead.
By hiring an online fulfillment company, you’ll pay a storage fee that is substantially less than renting or buying your warehouse and hiring workers. Most 3PL pick and pack companies only charge for the shelf space you need, resulting in significant savings.
Tired of searching the web for a “warehouse near me”? Try Simpl Fulfillment. We pick and pack orders and get the lowest shipping rates, thanks to our high-volume shipper status, and we have a centrally-located warehouse in Austin, TX.