The 5 Fundamentals of Great eCommerce Warehouse Operations
February 29, 2024
by ReturnGO

When starting an eCommerce business, most founders are excited to design, market, and launch their products, inspired by a clear vision. Most, however, do not start an eCommerce business because they desperately want to run a warehouse, nor do they usually have much expertise in the matter. 

While eCommerce fulfillment is by no means a simple thing, here are some core fundamentals that should help lay the foundations for an efficient operation.

1. Ecommerce Warehouses Shouldn’t be Set up Like Traditional Warehouses 

When most people think of a warehouse, they will picture forklift trucks, pallets of items, and people in hard hats. What if we told you that in eCommerce, none of these are needed? In fact, they are mostly discouraged and can actually be bad for business. 

While B2B operations may need to move large amounts of the same item from place to place, hence the pallets, in eCommerce, you are most likely selling individual items and collections of items to lots of different people. This requires ‘piece picking’ from a large pickface. Having too much inventory stored in bulk, rather than available to pick, leads to spending too much time on replenishment, and often having to get the forklift out to move items from the high-up bulk areas and down to the floor-based picking area.  

In a perfect eCommerce-only warehouse, you would use ALL of your available locations and storage for picking. The goods coming in on pallets would be unpacked and moved straight into pickable locations. This removes wasted time replenishing locations when you are at your busiest and should be spending all working hours shipping goods. Of course, if space prohibits, the next best thing is to have easily accessible bulk locations and a clear-cut workflow for replenishing. 

As for the hard hats – usually, these are only needed when forklifts are working overhead while workers walk around underneath them. This is dangerous, and it would be much more suitable to just have humans, well organized, moving around the warehouse picking items, uninterrupted by bulky, expensive forklift trucks. 

2. Being Perfect at Goods-in Sets You Up for Accuracy 

Precision in – precision out. That is the mantra of top-quality operatives running the best eCommerce distribution centers around the world. If they can focus on just one thing, it will always be to make sure the goods-in, or ‘receiving’ process is 100% exact every single time. 

You need to be guaranteeing the accuracy of what is coming into your warehouse: to make sure you are listing the correct number of items on your webstores, to ensure your inventory levels are correct in your system as well as in reality, and of course, to check you haven’t paid for items you never received from your supplier. Get the goods-in process right up front, and that accuracy will allow everything to flow efficiently downstream in the process. 

An extension to this is to give somebody in your warehouse team the role of stock controller. 100% accuracy is what you are aiming for, not 99% or 99.6%. Efficiency and speed will follow if accuracy is in place, so having someone whose primary responsibility is to ensure inventory levels are exactly as expected will make everyone else’s jobs easier and more productive. This doesn’t mean they spend all their time doing full stock takes – with the right system you can spot-check consistently through days and weeks, updating, adding, or removing stock levels when needed.  

3. Be Precise With Your Picking Trolleys 

Any old bin on wheels will not cut it at high volume when you are trying to build a truly efficient eCommerce warehouse operation. From years of visiting brilliant warehouses around the world, we’ve come across both weird and wonderful innovations that have led us to our idea of the perfect eCommerce picking trolley

The first golden rule is to keep your trolley layouts flexible. The sections, divisions, and slots should not be set in stone. This way, if you are picking bulkier items like winter coats, you can make extra space, or if you’ve started selling items like necklaces in small boxes, you can opt for much smaller totes and have hundreds of them on one trolley, allowing you to pick and sort orders as you go around the warehouse. 

Buying 20 trolleys all the same and then expecting your average order profile or product range not to change over the next few years is a quick way to lose potential efficiency.

Other ideas to consider: add a step ladder onto the side of your trolley so that you can extend the height of your pickface and make more use of available warehouse floor space, buy transparent totes, or if you have hanging items as well as packed items, add a curved hanging rail onto your trolley so you can pick both types of products at once without worrying about damaging either item. 

4. Make the Best Use of Your Space With Dynamic Locations 

How you store your goods in your warehouse is another area where traditional thinking may need to be reconsidered. Most teams starting out will group items together – all the small blue ones in one place, all the large green ones somewhere else. Seems sensible at first and like it would surely make it easy for everyone to find everything. However, this approach does not scale and is not the most efficient use of space. By this logic, if you don’t have any small blue ones in stock, you’d happily leave a gap on your racking where those things would be, even if that gap was in prime real estate near the pack bench.  

A fundamental key to eCommerce warehouse management is adopting a dynamic storage policy. This means that any item can live in any location in your warehouse. It’s a quicker way to put things away and makes sure you use up any dead or empty space faster. It also cuts out a lot of the miss-picks that occur when a picker goes to grab an item from a box full of identical-looking items and accidentally picks a small instead of a medium, without double-checking. 

By using a scan-driven barcode picking system, in conjunction with a warehouse set up with dynamic locations, you’ll have space for more of your growth journey, have more efficient pickers, and be more optimized for changing product ranges and seasonality. 

5. Ecommerce is Not a One-Way Street 

Like it or not, returns and exchanges are a fundamental part of eCommerce. With more and more consumers treating their living room like a try-on room rather than a final destination for their purchases, any great eCommerce warehouse operation needs to have its reverse logistics processes spot on. 

So, what does that look like in practice? Firstly, it is helpful to know what orders are going to be returned, before the stock just appears at your warehouse having been returned by your customer. This way you can make preparations for how much goods-in and put-away staff you might need on shift, as well as make that stock available again to resell online ahead of physically having it in the warehouse. 

Secondly, you need an effective way to process those items when they do come back. Do you know for what reason the item was returned, and is the item still in a sellable condition? Unfortunately, a lot of returned items come back damaged from the customer, even if they claim not to have used/worn the product. A clear workflow for determining sellable or non-sellable products, at returns receipt, is going to minimize losses. 

These challenges can be addressed by using a returns management system like ReturnGO, integrated into a WMS like Descartes Peoplevox™. By having your customers use a returns portal, you will receive information on incoming items and the likely condition of those items. This data can be synced into your warehouse, where the team will be ready to process those items and restock them when necessary, in an effective manner. 

Conclusion

In summary, eCommerce warehouse management requires a fresh, agile approach, especially when compared to more traditional pallet-based warehouses most people are familiar with. 

By thinking strategically about the layout of aisles and bins, making the most of the space you’ve got, and aligning your logistics equipment with the actual products you are selling, your brand can be well on the way to fulfillment success.


This article was written by Descartes Peoplevox.

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