Choosing the right warehousing for your fast-growing business is challenging. To make an informed decision, you need to evaluate your growth trajectory and customer base and then weigh their needs against the benefits of each warehousing option.
In this article, we’ll break down the specifics of public warehousing, compare it with private warehousing, and provide a comprehensive checklist of key considerations to help you determine if public warehousing is the best fit for your business.
What Is a Public Warehouse?
A public warehouse is a large warehouse that allows businesses to rent space to store and fulfill their products. Space is usually rented according to the amount of square footage occupied by the product, and fulfillment services are provided for an additional fee by the warehouse. Agreements and SLA’s will vary from one warehouse to another and may include requirements for a minimum average order volume (AOV) or higher storage rates for slow-moving inventory.
What Are the Benefits of a Public Warehouse?
Public warehouses give you the opportunity to stay competitive against larger businesses and big box stores without having their own dedicated warehouses by renting public warehouse space from a third party.
The key benefits of public warehouses include:
- Lower costs: Without having to spend the capital, resources, and time it would take to manage and maintain their own dedicated warehouses, you are able to immediately start stocking skus and shipping to customers.
- Scalability: As business grows, merchants can begin to match inventory forecasting to scale up shelf space and negotiate new SLA’s as needed. With the right Warehouse Management System, public warehouse providers should be able to accommodate — and even proactively anticipate — when it’s time to scale up.
- Flexibility: Public warehouses often offer month-to-month leases, and when paired with a network of warehouses across the country, can give you the opportunity to move skus in a way that aligns with geographic demand.
- Strategic locations: With the emergence of ecommerce, you can now strategically select public warehouse locations that ensure 2-day delivery. With the right data and warehouse options, most SMBs are able to ship in 1-2 days to 95-99% of the United States without sacrificing margins.
Looking for a 1 to 2-day shipping solution? Talk to one of our fulfillment experts
Public Warehouses vs. Private Warehouses (add ~500 words)
A private warehouse is a storage facility owned and operated by a single business, typically larger enterprises with consistent, high-volume inventory needs. Companies with significant control over their supply chain, like major retailers or manufacturers, use private warehouses to customize operations and reduce long-term costs. Below are a few additional factors to consider when comparing private vs public warehouses.
| Criteria | Public Warehouses | Private Warehouses |
| Storage Facilities | Public warehouses offer flexibility in terms of size. Businesses can choose the square footage of storage space they lease based on their needs. Public warehouses also have various capabilities from cold storage to climate-controlled, and humidity-controlled. | Private warehouses have a fixed square footage. Private warehouse owners also must build out the capabilities that match their storage requirements. This can be limiting when choosing new product categories to test into. |
| Inventory Mangement | In a public warehouse, inventory management is typically handled by the warehouse operator, using standardized systems to serve multiple clients. This setup provides scalability and outsourced expertise, but with less direct control over specific processes. | In a private warehouse, inventory management is fully controlled by the company that owns the facility, allowing for customized systems, processes, and technology tailored to their specific supply chain needs. This gives them greater flexibility but also requires significant resources and expertise. |
| Types of Warehouses | Public warehouses are full-service, offering inbound and putaway as well as product fulfillment (ie: pick, pack, and shipping services). Public warehouses can be fulfillment centers, deep storage warehouses, or distribution centers. | Private warehouses offer flexibility in terms of capabilities and service offerings. They can serve as fulfillment centers, deep storage, or distribution centers based on the owner’s needs. However, the owner holds the sole responsibility of building out capabilities and storage infrastructure, as well as managing labor, technology, and operational costs. |
| Costs | Public warehouses offer a variable cost model for storage and warehouse labor because resources can be scaled up or down based on need. Costs like property tax on the facility and general upkeep and cost of maintaining the building are absorbed by the warehouse owner. | Private warehouses come with a high upfront cost of building and outfitting the facility, and the day-to-day upkeep of the building, property tax, and staffing are ongoing fixed costs for the building. Storage costs are consistent and can help offset costs like excess inventory and long-term storage. However, the overhead cost of maintaining the building offers little flexibility and may ultimately damage margins for fast-growing brands. |
| Customer Experience | Public warehouses typically offer standardized services that cater to a diverse customer base, allowing businesses to scale their operations quickly and efficiently. This flexibility can enhance customer experience by providing reliable access to storage and distribution services, which can lead to increased customer satisfaction through timely deliveries and inventory availability. | Private warehouses enable companies to customize their operations to meet specific needs, enhancing the customer experience through personalized customer service and optimized inventory management. By focusing on the unique requirements of their customer base, private warehouses can foster stronger relationships, ultimately improving customer satisfaction and encouraging loyalty through tailored solutions and efficient handling of products. |
| Distribution Process | The distribution process in public warehouses is designed to accommodate periodic demand with a focus on flexibility and scalability. These warehouses typically use a shared infrastructure that allows multiple businesses to store and distribute their products, which helps to lower distribution costs through economies of scale. By leveraging a network of transportation options and standardized processes, public warehouses can facilitate rapid delivery, ensuring that goods are available for customers when needed, even during peak demand periods. | In private warehouses, inventory distribution to meet rapid delivery expectations and pivot in response to periodic demand is the sole responsibility of the warehouse owner. Private warehouse owners are limited in their distribution capabilities based on their in-house technology stack and ability to maintain multiple warehouse locations closest to their largest pockets of consumer demand. |
| Adaptability to Business Growth Frase keyword/s to include: business model, business reputation, business interruption, business decision, business assessment, business requirements | Public warehouses offer significant adaptability to business growth by aligning seamlessly with varying business models and fluctuating business requirements. Their shared resources allow companies to scale operations without the need for substantial capital investment, reducing the risk of business interruption. As businesses assess their growth strategies, public warehouses enable quick pivots to accommodate increased inventory levels or seasonal demand, positively impacting business reputation through reliable service and rapid response to changing needs. | In contrast, private warehouses may struggle to keep pace with business growth due to their fixed infrastructure and higher operational costs. While they can be customized to meet specific business requirements, the capital investment necessary for expansion can pose challenges, particularly in times of rapid growth. Business decisions regarding warehouse capacity and layout often require extensive assessment, which can lead to delays in responding to market demands. This inflexibility may hinder a company’s ability to maintain a strong business reputation, especially during critical growth periods or unexpected changes in demand. |
What to Look For in Public Warehousing Services (add ~400 words)
In the U.S., there’s no shortage of public warehousing services, with a staggering 4,276,472 transportation and warehousing businesses available. However, identifying the right public warehousing service that integrates innovative technology to streamline operations and enhance efficiency can be a more challenging task.
As warehousing continues to evolve with AI and machine learning, the driving force behind this shift is clear: warehousing is no longer about physical storage, or even third party support: it’s about better data management.
That’s why forward-thinking businesses are rethinking the role of public warehouses by integrating smart technology, which is becoming ever more critical for scaling, saving costs, and ultimately staying competitive in a 1-click purchase marketplace.
Here’s a list of considerations to keep in mind when looking for a public warehouse service.
1. Location or warehouse network
When looking for a public warehouse service, you must decide which warehouse location(s) is optimal by considering every step of the logistics process.
Key considerations include:
- Nature of location: One key decision is the nature of the location: rural, secondary market, or major urban hub. Traditionally, demand for products starts in densely populated, urban areas, disseminates to secondary markets, and then to more rural areas. It’s also important to consider transit times across your entire supply chain and choose locations convenient to major ports.
- Flexibility: With the growing popularity of ecommerce and online marketplaces, demand can come from anywhere, so it’s important to choose a solution that allows you to stay nimble. Having multiple warehouse locations connected by a single fulfillment technology enables you to reallocate inventory based on changes in demand.
However, no matter how convenient your warehouse locations are to your end customers, you will not meet the growing expectations for fast and affordable shipping without the right service level agreements (SLAs) from your warehouse partners.
Find the optimal warehouse locations for your ecommerce business with our fee network optimization tool, NetworkVu.
2. Data-Backed Service Level Agreements (SLAs)
Inventory is most merchants’ greatest investment, so it’s important to choose a partner that prioritizes the safety and proper management of inventory.
Key considerations include:
- Same-Day Fulfillment: For most consumers, the clock starts ticking on delivery promises as soon as they check out. Same-day fulfillment is key to meeting your customers’ expectations for delivery.
- Cycle Count Accuracy: Warehouses that use data and double-verification should achieve at least 99.5% cycle count accuracy.
- AI and Machine Learning: Warehouses that leverage AI for inventory forecasting and demand planning.
- Predictive Analytics: Ensure the warehouse can provide data-backed insights into inventory trends and projections.
Today’s tech-enabled public warehouses offer enterprise-grade technology capabilities for businesses of all sizes and easily plug into your existing tech stack. They also offer value-added services at the same scalable and flexible rates as standard warehousing and storage services.
3. Built-In Benefits and Services
When choosing the right option for a public warehouse, benefits and services outside of simple storage space are where you can find the most value. This is how 3PL’s originally disrupted the warehousing space, by absolving time-consuming tasks from internal teams to free up time and effort.
Some common benefits of 3PL’s include:
- Receiving inbound shipments: Quickly checking in and putting away inventory enables to start selling faster. Find a partner that won’t leave your inbound shipments sitting on the dock when they could be realizing revenue.
- Inventory counts and reporting: In the fast-paced world of ecommerce, it’s important to know that physical inventory on-hand matches inventory available to sell, and inventory cycle counts are key to ensuring that accuracy.
- Basic quality control: Basic quality control involves systematic checks and inspections of incoming and outgoing products to ensure against damages through proper storage, product handling, and packout procedures.
3PL’s often use a Warehouse Management System (WMS) to track and report on these processes.
Ware2Go is a UPS company that offers full-service public warehousing with an integrated technology platform to enable brands of all sizes to scale their business on their terms.
A diverse nationwide warehouse network, industry-leading service levels, and simple technology integrations make Ware2Go the ideal partner for brands of all sizes looking to delight their customers and protect their bottom line. Click here to learn more about Ware2Go’s services and technology.
4. Flexibility and Cost Structure
When searching for a public warehouse service, it’s crucial to seek a provider with a flexible contract and cost structure that enables your business to grow and scale effectively.
- Scalable Storage Options: This means the ability to adjust your storage space based on your inventory needs; look for terms that allow you to increase or decrease your space without excessive fees, while terms that lock you into a fixed amount of space can hinder your flexibility.
- Flexible Contract Terms: These refer to the adaptability of your agreement, so seek contracts that allow for short-term commitments or easy renegotiation, as rigid long-term contracts can limit your responsiveness to market changes.
- Transparent Pricing: This entails clear, upfront costs without hidden fees; ideal terms include itemized pricing structures that detail storage, handling, and additional service charges, while vague or convoluted pricing can lead to unexpected expenses.
By prioritizing these terms, you position your business for success as you navigate the dynamic landscape of supply chain management, ensuring you can effectively respond to market demands and customer needs.
5. Reputation and Experience
Partnering with a reliable public warehousing provider that has a strong track record is crucial for ensuring smooth operations and maintaining customer satisfaction; choosing an unreliable service can lead to inventory discrepancies, delayed shipments, and ultimately damage to your brand’s reputation.
- Customer Reviews and Testimonials: These can typically be found on the provider’s website, industry forums, or review platforms like Google and Yelp; pay attention to feedback regarding their responsiveness, accuracy in order fulfillment, and overall service quality.
- Industry Certifications and Compliance: Look for certifications such as OSHA compliance for safety standards and ISO 9001 for quality management, as these credentials demonstrate a commitment to operational excellence and reliability in the warehousing process.
By considering these factors, you can ensure that you select a dependable public warehousing partner, which sets the stage for leveraging technology to further enhance your supply chain efficiency.
The Growing Role of Technology and Data Management in Public Warehousing
You can save time and effort by trusting 3PL’s with logistical operations, but even with these benefits many are finding they’re still unable to deliver on customer expectations for 2-day shipping.
Why? Because to deliver on 2-day shipping, SMB’s have to ask themselves three critical questions:
- Are my public warehouses in the right, strategic locations?
- Are we thinking about our processes as steps in a chain or holistically?
- Are we integrating smart technology throughout the entire process?
Forward-thinking SMB’s are future-proofing their logistics — and their bottom line — through holistic public warehouse data management.
Here’s how it works.
1. Create a Vertical Process
On-demand warehousing takes into account every detail of the logistics process and uses data to optimize each along the way. This means having centralized, integrated technology that combines a Warehouse Management System (WMS), Order Management System (OMS), and Transportation Management System (TMS) into one platform for seamless fulfillment management.
2. Compound the Power of Big Data
When all systems are integrated, data becomes much more useful. Rather than being isolated in separate silos and leaving business owners to connect the dots, a single platform allows one data set to instantly inform others. This means that business owners can now significantly reduce risks of common logistics issues like the “bullwhip effect”, uncertainty about stock and shelf space, and optimize shipping and receiving.
3. Proactively Automate Operations
AI and machine learning take the power of big data one step further by not just adjusting the levers on your processes as needed, but also proactively predicting trends or changes. This kind of automation not only gives businesses more time to focus on growing their business, but also gives them peace of mind that they are making the most of the systems in place in real time.
Ware2Go’s powerful fulfillment technology serves as the single integration point between all of your sales channels and faster fulfillment. Quickly and easily integrate any ecommerce platform, marketplace or order management system. Using advanced order orchestration logic, Ware2Go’s platform automatically routes orders to the warehouse closest to your end customer to enable fast and reliable ground shipping anywhere in the country.
To learn more about how public warehousing is changing and the role of integrating smart technology through the logistics process, reach out to one of our in-house experts.
The Ultimate Checklist: How to Decide if Public Warehousing is the Right Choice for You
If you’re considering whether public warehousing is right for your business, this handy checklist will help you decide if it may be time to look for a more flexible, cost-variable fulfillment model. If you’re able to check five or more of the following items on this list, consider reaching out to a fulfillment expert at Ware2Go to discuss your options.
| Scalability | |
| Are you projecting significant changes in stock levels over the next 12-24 months? | |
| Do you anticipate needing more space or flexibility in storage capacity over time? | |
| Would a scalable storage solution help you manage unexpected spikes in inventory? | |
| Financial Considerations | |
| Are you looking to reduce the overhead costs associated with owning or leasing private warehousing? | |
| Would a pay-as-you-go model for storage space better align with your cash flow at the moment? | |
| Can public warehousing help you avoid long-term commitments and capital expenditures? | |
| Geographic Reach and Distribution Needs | |
| Do you need warehousing services in multiple locations to reach your customers faster (2-day delivery)? | |
| Would a strategically located warehouse improve your distribution efficiency? | |
| Are you looking to expand into new markets without investing in new facilities? | |
| Inventory Management and Technology | |
| Do you require advanced inventory management systems that you may not currently have in-house? | |
| Are you interested in using technology for real-time tracking, reporting, and forecasting? | |
| Would a warehouse with integrated systems streamline your supply chain operations? | |
| Specialized Storage Requirements | |
| Does your inventory require special handling, such as temperature control, hazardous material storage, or high-security facilities? | |
| Would a public warehouse provider with industry-specific expertise meet these needs? | |
| Do you need flexibility in storage types, such as bulk storage, rack storage, or cross-docking? | |
| Logistics and Transportation | |
| Are you seeking a solution that integrates warehousing with transportation and logistics services? | |
| Would a public warehouse provider’s existing partnerships with carriers reduce your shipping costs? | |
| Do you need a provider that offers value-added services like packaging, labeling, or order fulfillment? | |
| Flexibility and Responsiveness | |
| Do you need the ability to quickly adjust storage space based on market conditions? | |
| Would a public warehousing solution provide the responsiveness required to meet changing customer demands? | |
| Can a third-party provider offer the flexibility to scale up or down without penalties? | |
Take the First Step in Using Public Warehousing
Public warehousing offers flexibility, cost savings, and the ability to scale your business without the hassles of long-term contracts or managing private facilities.
If public warehousing is right for you, the next step is to choose a reliable provider and plan your transition. Ware2Go connects you with a nationwide network of warehouses, helping you scale efficiently.
To learn more about Ware2Go, talk to our team today.
