Shared Warehousing or Dedicated Warehousing?
Whether you are a thriving enterprise, or just starting out as a company, your product is stored in a warehouse. As a business, your main concern will be the most cost effective way to store your goods, and in that, you have two options available to you.
The first is dedicated warehousing, wherein your company owns or leases the building in which you are storing your product. The second is shared warehousing, where multiple businesses share a single building and pay rent equal to usage and traffic at the time.
Why You Should Choose Shared Warehousing
Dedicated warehousing has its own merits; product you sell is contained within a space that you own, and you can do with the building as you please. However, it can also be a burden, especially for businesses that are just starting out.
Dedicated warehousing is like owning or renting a very large house; you are responsible for maintenance, utilities, labor, machinery, rent, as well as other costs associated with owning a building.
For a well-established business, this may not be such a bad cost. However, new entrepreneurs may have a hard time staying afloat.
The solution is shared warehousing. Shared warehousing is a building that is rented through a third party, Many businesses share one building, and the costs of said building are spread across all parties.
As an added bonus, your costs may fluctuate depending on your peak times during the year, with you paying less during those months with less traffic. For small businesses, this is a boon to staying in the black, and out of the red.
Adjust To Fit Your Needs
Shared Warehousing is not only cost effective, but it works to expand to your needs as well. Supply and demand for a product are always fluctuating; what is or is not popular, or what is or is not selling as well as it should, you will constantly be changing, growing, or cutting your stock to make the most from what your clients want and need.
With this, your warehouse should be able to fluctuate as well, giving you more or less space dependant on how you need it. With a shared space, this is entirely possible.
You can grow to fit your growing demand, or during those busy times of the year when you need to stock on more product. In the leaner months, you downsize and take up less space.
With dedicated warehousing and distribution, adjusting space is simply not possible; a smaller product line will take up the same amount of space as before, and if you need to expand your services, you may be looking at a bigger warehouse and a bigger monthly price tag.
No Hassle Inventory
Because shared warehousing is managed by a third party, you don’t have to worry about the finer details of your inventory either. It’s all handled externally, and it ensures quality satisfaction for you and your clientele.
This has the added benefit of reducing shrink; lost product is lost profits, and minimizing mistakes is the key to maximizing your sales and customer satisfaction.
Your warehouse is managed by experts in the field, with the relevant experience necessary to ensure that your products are handled with the care you would give yourself.
Sharing Is Saving
Just through rental costs alone, shared warehouse expenses are much lower than if you rented the building yourself. Most rental companies charge a lease rate with your monthly rent, with the lease rate being calculated per square foot of your warehouse.
Assuming that you have a warehouse of 5,000 square feet, and a lease rate of $1.20 per square foot, you’re already looking at over $6,000 per month. Considering now the average warehouse clocks in at around 20,000 square feet, you’re looking at a hefty price tag to take on by yourself. Shared warehousing shares this cost, and leaves you with a much more manageable bill at the end of the month.
In conclusion, shared warehousing is a more cost-effective option, especially for smaller businesses which still are experiencing growth, or for companies that have frequent fluctuations in their product line.