Business : Warehousing 101

Warehousing 101: 

Let’s face it. Warehousing is expensive and cumbersome. You have developed a product and a brand and without knowing, you inherited the need to warehouse your products, potentially without realizing it.  

Often, brands do not take into account the effect maintaining and operating a warehouse will have on their bottom line. The majority of you operational expenses will be affected by jjIf you’re considering renting or buying a warehouse, you need to keep these expenses in mind. Optimizing your ecommerce warehouse costs will help your brand increase profitability but it can be challenging to do. 

That’s why we’ve put together this comprehensive guide to give you a better understanding of the various warehouse costs, how warehouse pricing is calculated, and whether buying or renting would be a better option for you. Additionally, we’ll show you how you can optimize your warehouse costs so they aren’t cutting into your revenue. Let’s get started. 

Understanding warehouse costs: where do they come from? 

Warehouse costs refer to the expenses incurred to run a warehouse. These costs are a combination of expenses that help a warehouse run efficiently, not just the cost of renting warehouse space. Some of these are variable costs, meaning that you can expect the total cost of running a warehouse to change each month. 

Having a thorough understanding of the various warehousing costs is essential for effective supply chain management. It gives you a realistic picture of your inventory holding costs so you can identify opportunities for cost reduction. Let’s break down the main components of warehouse costs. 

Rent 

If you’re renting warehouse space, rent will make up a significant portion of your total warehouse expenses. Rent is typically calculated based on square footage, warehouse rental costs will vary depending on the total storage space you use. Some warehousing companies will also charge you for the number of items you’re storing in the facility. 

Upkeep 

For businesses that own their own warehouse, the cost to maintain the facility is included in the overall warehouse expenses. This includes the cost of regular maintenance, cleaning, and repairs as well as any improvements they make to the space.