Logistics Wordbook

E-commerce Warehouse

Logistics Glossary

What is an e-commerce warehouse?

An e-commerce warehouse is the facility from which the orders that customers have purchased from an online store are assembled and shipped. These logistics centers have to ship a large number of orders in the shortest possible time and consequently require fast, error-free processes.

E-commerce logistics is an essential element for any business that uses the Internet to sell, retaining its customers while reducing costs. This article analyzes how important it is for such companies to keep their warehouse running smoothly in order to overcome the most important challenges related to e-commerce. We also explain what solutions can be implemented to optimize the functioning and organization of these warehouses.

Challenges of an e-commerce warehouse

The e-commerce sector is on an upward trend. The number of transactions and customers who buy via the Internet is increasing unabated. According to a study by consulting firm McKinsey , e-commerce sales grew by 160% between 2014 and 2019 (i.e. six to eight times the growth rate of traditional commerce). This trend has been accelerated by the pandemic, with e-commerce now accounting for between 13% and 17% of total retail.

The expansion of e-commerce has completely transformed logistics and warehouses. A traditional warehouse generally receives the products, stores them and then prepares the orders that it ships depending on the available inventory. The process in an e-commerce warehouse, on the other hand, is different, as a large number of orders are put together every day, which often contain different items and which are delivered to the customers in the shortest possible time. Also, these companies’ sales can be  highly seasonal, with peaks in demand typically concentrated at specific times of the year, such as Black Friday, Christmas , or the sale.

E-commerce companies typically manage many types of items, even if some of these items are not in stock and therefore need to be requested from suppliers. In order to have the products on time and to deliver them to the customers on time, good communication between the warehouse and the suppliers is necessary. After identifying the goods, the warehouse workers must organize the products considering the list of orders that need to be assembled. For example, if there is no immediate demand, the goods can be stored, or if a customer has already ordered an item, it can be sold directly.

Solutions for an e-commerce warehouse

An e-commerce company’s warehouse needs to have fast fulfillment. In other words, all the processes that take place between the receipt of the order and the delivery of the goods must be carried out as quickly as possible: both the storage of the products and the preparation of the order , as well as the packaging and distribution of the goods (including returns management ). So how can these processes be accelerated? With the help of storage systems that favor the handling of the goods and the picking of orders, and with the help of technology.

Storage systems

In an e-commerce warehouse, the storage system – whether automatic or manual – is implemented that best adapts to the specifics of the company and that speeds up order picking .

Above all, the system implemented must provide direct access to the products , which is essential for order picking. One option is picking shelving , designed to store small products, easily assembled and expandable with additional modules depending on the needs of the business. They only have one disadvantage: they are usually no higher than two meters.

When greater height is required, alternatives can be identified, such as constructing taller racks and allowing warehouse workers to use elevating order pickers to reach goods stored in the upper storage positions. Another alternative to using the height of the warehouse – which is used in many logistics facilities – is the construction of mezzanines on which the racks are assembled, or the construction of very high racks and the creation of elevated aisles between them, on which the warehouse workers can go.

Another option to speed up order picking is to automate e-commerce by implementing goods-to-man ( aka goods-to-person ) solutions. For this purpose, automatic container warehouses can be configured, systems in which the warehouse workers wait at a picking station for a miniload system , for example, to bring the goods to them independently.

Transport systems

Another strategy companies are using to speed up fulfillment is to reduce trucking and warehouse worker movement through the warehouse. One of the most common options to achieve this goal are automated handling devices such as conveyor systems, which autonomously transport the assembled orders to the consolidation area. These systems are also normally installed in warehouses with mezzanine floors, as well as in racks with walkways to automatically connect the different levels of the warehouse .

Conveyor system autonomously transport the assembled orders to the consolidation area
Conveyor system autonomously transport the assembled orders to the consolidation area

Management system

In the warehouse of an e-commerce company, inventory information must be very accurate and reliable to facilitate all operations. One solution to achieve this is to implement a warehouse management software (WMS) that identifies and organizes the warehouse’s products according to the characteristics of the items and the list of orders that need to be assembled.

A WMS is an essential partner for any e-commerce business as it simplifies warehouse operations with the aim of shipping the largest number of orders without delays. To do this, it sends clear instructions to the warehouse workers on how to complete each order (by showing which items are required and in which aisle and storage position they are).

E-commerce warehouse: maximum order shipping speed

The boom and consolidation of e-commerce has led to a myriad of changes in warehouse operations. The e-commerce boom has shown that customer satisfaction is a top priority. The entire organization of the warehouse of an e-commerce company, both the distribution of the goods and the work of the warehouse workers, must focus on delivering the desired orders to the customers. To do this, it is necessary to have storage and management systems that speed up order picking.

Get in touch with Waredock so we can advise you and find the best solution for your e-commerce business.

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