To many people, a warehouse is imagined as a large and fairly mundane facility full of boxes of stored goods. In reality, modern warehouses are often organised and lively centres for inventory management and can differ massively based on their type and usage.
For ecommerce businesses, the warehouse is an integral part of order fulfilment and has a massive impact on your ability to be efficient and agile. It is therefore crucial that ecommerce business managers choose the right type of warehouse for their store based on their business needs.
In this article, we explore all 10 of the different types of warehouses available to help you decide which one works best for your business.
We’ll cover the following topics:
- 10 different types of warehouses
- Which warehouse is best for your business?
- Warehouse qualities to look for
- How to increase your productivity with Mintsoft
10 different types of warehouses
A warehouse is, put simply, a large building where goods and materials are temporarily stored before being sold and shipped to retailers or consumers. Despite this broad term, warehouses can differ greatly depending on their type and the businesses they’re designed to serve. When a company identifies a need to use a warehouse, they are required to explore the various types to choose the best one for their specific goods or products.
In this section, we explore 10 of the most common types of warehouse, running through each one’s unique features and benefits to help you choose the best warehouse solution for your business needs.
1. Public Warehouse
Public warehouses are a type of warehouse owned by a government entity that can be rented out for either business or personal use, although they are most commonly leased to private sector companies.
This type of warehouse is ideal for businesses that require inventory storage for a short amount of time due to the relatively low cost compared to other warehouse options. They are most commonly used by new or growing businesses such as start ups or small ecommerce companies. One downside is that public warehouses tend to be fairly basic in terms of infrastructure and won’t have the technological capabilities of the other warehouse types on this list.
Pros
- Accessible to the public
- Affordable solution for small/new businesses
- Ideal for seasonal industries
- Good short-term storage
Cons
- Basic in terms of technology and infrastructure
2. Private Warehouse
Another popular warehousing option are private warehouses, sometimes referred to as proprietary warehouses. Rather than being publicly owned by a government body or third-party, private warehouses are owned by a company division. For businesses interested in a private warehouse, a significant upfront investment is usually required to secure the building, facilities management, maintenance and upkeep.
Private warehouses are most popular among wholesalers, distributors and manufacturers. While this type of warehouse is a more expensive option than public warehousing, it offers businesses greater control of their inventory management.
Pros
- Increased control over building facilities
- A good option for companies requiring a significant long-term presence in a specific location
- Provide a more exclusive location for business operations
Cons
- More expensive and require large upfront investment
3. Smart Warehouse
A more recently developed type of warehouse is a smart warehouse, where storage and fulfilment processes are automated using AI, such as robots and drones. This AI can be used to pack, weigh, transport and store materials, with most of the incoming orders being automatically fulfilled immediately.
Smart warehouses are now the go-to option for large ecommerce companies such as Amazon that aim to make the order fulfilment and inventory management process as accurate and efficient as possible, by using warehouse technologies.
Pros
- Inventory management is more accurate
- Automation reduces human error and saves labour costs
- Safer and more secure facilities
- Provides insight into overall business efficiency
Cons
- Can require substantial initial investment
- May require technical training and upskilling of employees
4. Cooperative Warehouse
A cooperative warehouse is a warehouse owned by multiple organisations or businesses. Generally, these tend to be companies that work closely together and a shared warehouse can prove cost effective for all parties involved.
This type of warehouse is most commonly used among farmers or wineries, as these businesses can easily store their products in a shared space. Businesses that use a cooperative warehouse can reduce their inventory storage costs, increasing all of the cooperative member’s profits in the long run.
Pros
- Ideal cost-saving solution for businesses with similar inventory types
- More accessible due to combined investment
- Can save businesses money on lease rates with a reduction for multiple tenancies
Cons
- Requires an agreement between multiple parties
5. Consolidated Warehouse
Consolidated warehouses are used to collect smaller shipments from multiple different suppliers into one geographical location to combine or consolidate them into a bigger, and therefore more economical shipping load to one area.
The advantage of this for smaller companies and startups that may not have a very large amount of inventory is that they can save money on fulfilment. One drawback is that these shipments will need to be intended only for one area, which may be restrictive, especially for businesses looking to expand.
Pros
- Economical and time-saving
- Low shipping costs for tenants
- Doesn’t require large inventory
- No capital investment required
Cons
- Restrictive in terms of shipping location options
6. Bonded Warehouse
A bonded warehouse is used for the storage of imported goods before customs duties are completed and paid for. Customs clearance can be an extensive process, and bonded warehouses exist to provide a safe space for goods awaiting clearance.
Their name can be attributed to the bond system used in their lease, whereby government bodies provide businesses a bond to rent the space to ensure they do not suffer any profit losses once the products are ordered. Bonded warehouses are an attractive option for importers requiring short-term or long-term storage for items that would otherwise be restricted.
Pros
- Companies are not required to pay duty on items until they are released for delivery
- Facilities tend to be versatile to accommodate a variety of product types
- An ideal option for companies dealing with cross-border trade
Cons
- Stock is stored in a specific warehouse, meaning it can take a long time for order to be fulfilled
7. Government Warehouse
Government warehouses are owned by the government and made available for either public or private businesses to use. Their main advantage comes in the form of increased security, which can be beneficial for certain products or goods.
A drawback of this type of warehouse is that it involves an intense application process and extensive paperwork to store products, which may be time and cost inefficient for some businesses. Another disadvantage is that in the event of a business falling into a rent arrear, the government can dispose of inventory in order to recover the rent owed.
Pros
- Increased security for sensitive goods and products
- Generally affordable rates and accessible warehouses
Cons
- Tricky application process and lots of paperwork required
- Possibility of inventory loss for rent payment failures
8. Cold Storage Warehouse
Cold storage warehouses are used for the storage of temperature-sensitive products. This type of warehouse might be an entire building or a specific portion of a warehouse that can accommodate these goods.
Cold storage warehouses are designed to have regulated environmental conditions to ensure inventory is safe and no losses are suffered or quality is diminished before goods are delivered. Their main advantage is their ability to provide a safe space for perishable goods such as food or medicine.
Pros
- Ideal option for companies with perishable inventory
- Attractive for businesses that sell products that require certain storage conditions such as artwork or plants
Cons
- Not all products are suitable for cold storage, meaning there are limitations on the types of products which can be stored
9. On-Demand Warehouse
On-demand warehouses have become increasingly popular with the rise of ecommerce. This type of warehousing connects businesses that need urgent, short-term storage with companies holding an excess of unused warehouse space.
This provides an attractive option to businesses that might need storage for temporary or seasonal periods. Similar to cooperative warehouses, on-demand warehouses are a great option for merchants that are willing to combine their inventory needs.
Pros
- Great for businesses that are dealing with a sudden, unexpected spike in inventory
- Appealing for similar companies able to store goods in the same space
- Cost-effective for seasonal or short-term temporary warehousing needs
Cons
- Inventory management can become complex, which increases the risk of errors occuring
10. Distribution Centres
Distribution centres are designed to take in large quantities of inventory for the purpose of moving it out to retailers and merchants relatively quickly. Compared to a typical warehouse, products in a distribution centre move around much more and a lot quicker within a supply chain.
Distribution centres differ from fulfilment centres which are typically used by third-party logistics companies rather than distributors or retailers. These warehouses are the vital connection between suppliers and customers and are useful not only for inventory storage, but also for distribution, fulfilment and shipment preparation.
Pros
- Affordable for companies selling to wholesalers
- Designed to increase overall efficiency
- Savings on long-term storage of products
Cons
- Can result in less control over key processes depending on the provider chosen
Which warehouse type is best for your business?
With so many different types of warehouse, each with its own purpose, picking a suitable one will most likely come down to your specific business needs, supply chain, market, and budget.
An ecommerce business that sells food may find that distribution centres are their best option, although for specific perishable products they may also need to use cold storage warehouses. SMBs that engage in large volume cross-border trade will likely find that bonded warehouses work best for them. For small ecommerce businesses and startups, consolidated warehouses offer a good balance of autonomy and reduced costs.
Warehouse qualities to look for
Now we’ve looked at the different types of warehouse, it’s time to consider some of the finer details that are important when it comes to choosing the right storage location for your business. While each warehouse may differ, there are a few general qualities and characteristics that should be identifiable any safe, efficient, and well-managed warehouse including:
- Modern safety and security systems
- Trained staff
- Up-to-date software
- Latest mechanical appliances
- Emergency protocol up to the latest standards
- Properly designed interior
- Prompt delivery and positive customer service
- Accessibility and market proximity
- Organised picking and receiving processes
- Quality check processes
- Appropriate storage space
- Proper temperature controls (for cold storage warehouses only)
How to increase your productivity with Mintsoft
When using warehouses for storage and distribution, it is important you make sure your operations are as smooth and efficient as possible.
Investing in warehouse management software will make sure the right product is at the right place at the right time, with the least amount of friction.
Mintsoft’s warehouse management software allows you to track inventory levels, increase pick and pack speed and accuracy, as well as monitor shipments. It also lets you create reports that inform you of further ways to improve, saving you time and money.
Book a demo to find out more about how Mintsoft can support your business today. Or, if you’d like to learn more before making that crucial decision, read our article on how to choose the best warehouse management system.
