Optimal Inventory Storage Systems for eCommerce Shops

Table Of Contents:


Understanding Inventory Storage

Top 3 Efficient Approaches to Inventory Storage

A List of 6 Common Inventory Storage Methods

Top 6 Inventory Organization Techniques for E-commerce Companies

Industry-Approved Best Practices for Inventory Management




Effective inventory management and storage are crucial for the success of any eCommerce store. Poor inventory management can result in increased holding costs, dead stock, obsolescence, and tied-up capital. While smaller businesses may not face significant challenges initially, medium to enterprise-grade businesses can encounter nightmares without proper inventory storage systems. In this article, we will explore various methods and techniques for organizing and categorizing stock in storage facilities.

Understanding Inventory Storage:

Inventory storage involves the careful placement of items in distribution centers or storage facilities for future sales. It encompasses various management techniques and solutions to ensure smooth supply chain operations for eCommerce companies.

Top 3 Efficient Approaches to Inventory Storage:

To address the challenge of storing items for immediate dispatch upon receiving an order, businesses employ three primary methods:

1) Self-Storage:

Entrepreneurs rent rooms, garages, or storage units to store their products. Self-storage is suitable for budding businesses but not recommended for extended periods due to limited climate control options and increased risk of damage.

2) Traditional Warehousing:

Similar to self-storage, traditional warehousing lacks advanced technology but provides better damage control protocols. However, it falls short in handling fast-changing consumer demands, omnichannel fulfillment, and longer lead times.

3) 3PLs (3rd Party Logistics):

Many eCommerce businesses now opt for 3PL services or Warehouse Management Systems (WMS). 3PLs offer real-time inventory visibility, reducing stock management costs, and providing assistance with inbound and outbound logistics.

A List of 6 Common Inventory Storage Methods:

Let's explore the six most commonly used inventory storage methods:

1) Central Storage:

Products shipped to customers originate from a single warehouse location, offering ease of management. However, central storage can result in longer order fulfillment times and limited safety stock during peak seasons.

2) Racks, Bins, and Shelves:

Products are designated to racks, shelves, or bins based on their size and shape, enabling better accessibility and order picking. Warehouses often divide storing space into zones for efficient classification.

3) Block Stacking:

Products are stacked directly on the floor, saving space. While cost-effective, block-stacking can be unstable, leading to potential damage and reduced accessibility.

4) Point-Of-Use Storage (POUS):

Inventory is stored at the location where it will be used. This method is more suitable for manufacturing units but can be employed by hyperlocal businesses partnering with local shops for fulfillment.

5) Dry Storage:

Used to stock products sensitive to moisture, air quality, or lighting conditions, such as food items and packaged goods. Dry storage requires specific cleaning, monitoring, and temperature control.

6) Cold Storage:

Ideal for perishable goods, cold storage maintains subzero temperatures to increase shelf-life. It utilizes specialized equipment like refrigerators, chillers, and cold rooms, along with temperature-controlled vehicles for delivery.

Top 6 Inventory Organization Techniques for E-commerce Companies:

To ensure efficient inventory management and streamline operations, consider implementing the following techniques:

1) FIFO and LIFO (First In, First Out and Last In, First Out):

FIFO prioritizes selling the older stock first, while LIFO focuses on clearing recently received items. These practices are influenced by the nature of the products and market trends.

2) ABC Analysis:

Categorize inventory based on cost, risk, and importance. Segments include high-cost, lower-sales items


2) Can Inventory Storage Increase the Value of Products Over Time?

Yes, inventory storage has the potential to increase the value of products over time. Market fluctuations and changes in demand can cause the price of certain items to rise significantly from the time they were initially purchased. This phenomenon is known as inventory profit. E-commerce businesses that employ inventory management strategies like Last In, First Out (LIFO) may benefit from such price increases. However, it's important to note that the occurrence of inventory profit is unpredictable, and there is a risk of inventory becoming outdated or unsaleable if not properly managed.

3) How Can I Determine the Optimal Inventory Storage Method for My Business?

To determine the optimal inventory storage method for your business, several factors should be considered, including the size of your business, the nature of your products, storage space availability, budget, and the level of control and visibility you require. For small businesses with limited capital, starting with self-storage may be a viable option, but as your business grows, transitioning to a more sophisticated Warehouse Management System (WMS) or utilizing third-party logistics (3PL) services can provide better inventory management capabilities. It's important to assess your specific needs and consult with professionals or experts in the field to make an informed decision.

4) What Are the Risks of Poor Inventory Storage and Management?

Poor inventory storage and management can lead to various risks and challenges for businesses. These include increased holding costs, inventory obsolescence, stockouts, inaccurate stock counts, longer order fulfillment times, decreased customer satisfaction, and tied-up capital. Additionally, inadequate storage conditions can result in damage to products, leading to financial losses. Implementing effective inventory management practices and utilizing appropriate storage methods can help mitigate these risks and improve overall business operations.

5) How Does Inventory Storage Impact Order Fulfillment and Customer Satisfaction?

Inventory storage plays a crucial role in order fulfillment and customer satisfaction. By having well-organized and easily accessible inventory, businesses can ensure quick order processing and fulfillment. Efficient inventory storage methods enable accurate stock counts, reducing the chances of stockouts or overselling. This, in turn, leads to improved customer satisfaction as customers receive their orders promptly. Moreover, proper storage conditions help maintain product quality, ensuring that customers receive items in optimal condition, further enhancing their satisfaction with the overall shopping experience.

6) What Are the Key Considerations for Implementing an Effective Inventory Storage System?

When implementing an effective inventory storage system, several key considerations should be taken into account. These include the nature of your products (such as perishable or fragile items), storage space availability, scalability for future growth, accessibility for efficient order picking, security measures to prevent theft or damage, temperature, and humidity control if necessary, and integration with inventory management software or systems for real-time tracking and visibility. Evaluating these factors and aligning them with your business needs will help you design and implement an inventory storage system that optimizes operations and supports growth.

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