What is a Public Warehouse?

What is a Public Warehouse?

A public warehouse is a large warehouse that allows businesses to rent space to store and fulfill their products. Space is usually rented according to the amount of square footage occupied by the product, and fulfillment services are provided for an additional fee by the warehouse. Agreements and SLA’s will vary from one warehouse to another and may include requirements for a minimum average order volume (AOV) or higher storage rates for slow-moving inventory.

The role of a public warehouse in today’s marketplace

Public warehouses give SMB’s the opportunity to stay competitive against larger businesses and big box stores without having their own dedicated warehouses by renting public warehouse space from a third party. 

However, since the 1970’s, warehousing has evolved far beyond simple storage space. Around this same time is when Third Party Logistics companies (3PLs) emerged with a suite of logistics services, freeing up time and effort from internal teams. When software as a service (SAaS) started to boom in the 2000’s, merchants began putting trust into Warehouse Management Systems (WMS) and the growing concept of digital warehousing.

As warehousing continues to evolve with AI and machine learning, the driving force behind this shift is clear: warehousing is no longer about physical storage, or even third party support: it’s about better data management. 

Forward-thinking SMB’s are rethinking the role of public warehouses by integrating smart technology, which is becoming ever more critical for scaling, saving costs, and ultimately staying competitive in a 1-click purchase marketplace. 

What are the benefits of a public warehouse?

The key benefits of public warehouses include:

• Lower costs: Without having to spend the capital, resources, and time it would take to manage and maintain their own dedicated warehouses, SMB’s are able to immediately start stocking skus and shipping to customers.

• Scalability: As business grows, merchants can begin to match inventory forecasting to scale up shelf space and negotiate new SLA’s as needed. With the right Warehouse Management System, public warehouse providers should be able to accommodate — and even proactively anticipate — when it’s time to scale up. 

• Flexibility: Public warehouses often offer month-to-month leases, and when paired with a network of warehouses across the country, can give SMB’s the opportunity to move skus in a way that aligns with geographic demand.

• Strategic locations: With the emergence of ecommerce, SMB’s can now strategically select public warehouse locations that ensure 2-day delivery. With the right data and warehouse options, most SMBs are able to ship in 1-2 days to 95-99% of the United States without sacrificing margins.

Looking for a 1 to 2-day shipping solution? Talk to one of our fulfillment experts

How Should SMB’s Choose a Public Warehouse? 

1. Location or warehouse network

SMB’s must decide which warehouse location(s) are optimal through considering every step of the logistics process. One key decision is the nature of the location: rural, secondary market, or major urban hub. Traditionally, demand for products starts in densely populated, urban areas, disseminates to secondary markets, and then to more rural areas. However, with the growing popularity of ecommerce and the online marketplace, demand can come from anywhere, so it’s important for SMB’s to stay nimble. 

Find the optimal warehouse locations for your ecommerce business with our fee network optimization tool, NetworkVu

2. Data-backed Service Licensing Agreements (SLAs)

Inventory is most merchants’ greatest investment, it’s important to choose a partner that prioritizes the safety and proper management of inventory. A public warehouse that uses data and double-verification not only creates 99.5% cycle count accuracy, but AI and machine learning can make predictions on crucial projections like inventory forecasting. The innovative approaches to warehousing are why SMB’s should especially consider…

3. Built-in benefits and services provided by a public warehouse

When choosing the right option for a public warehouse, benefits and services outside of simple storage space are where SMB’s can find the most value. This is how 3PL’s originally disrupted the warehousing space, by absolving time-consuming tasks from internal teams to free up time and effort. Some common benefits of 3PL’s include: receiving inbound shipments, inventory counts and reporting, and basic quality control. 3PL’s often use a Warehouse Management System (WMS) to track and report on these processes.

How public warehousing is changing: The growing role of technology and data management 

SMB’s can save time and effort by trusting 3PL’s with logistical operations, but even with these benefits many are finding they’re still unable to deliver on customer expectations for 2-day shipping. 

Why? Because to deliver on 2-day shipping, SMB’s have to ask themselves three critical questions:

1. Are my public warehouses in the right, strategic locations?
2. Are we thinking about our processes as steps in a chain or holistically?
3. Are we integrating smart technology throughout the entire process?

Forward-thinking SMB’s are future-proofing their logistics — and their bottom line — through holistic public warehouse data management. Here’s how it works:

1. Creates a vertical process 

On-demand warehousing takes into account every detail of the logistics process and uses data to optimize each along the way. This means having centralized, integrated technology that combines a Warehouse Management System (WMS), Order Management System (OMS), and Transportation Management System (TMS) into one platform for seamless fulfillment management.

2. Compounds the power of big data

When all systems are integrated, data becomes much more useful. Rather than being isolated in separate silos and leaving SMB’s to connect the dots, a single platform allows one data set to instantly inform others. This means that SMB’s can now significantly reduce risks of common logistics issues like the “bullwhip effect”, uncertainty about stock and shelf space, and optimize shipping and receiving.

3. Proactively automates operations

AI and machine learning take the power of big data one step further by not just adjusting the levers on your processes as needed, but also proactively predicting trends or changes. This kind of automation not only gives SMB’s more time to focus on growing their business, but also peace of mind that they are making the most of the systems in place in real time. 

To learn more about how public warehousing is changing and the role of integrating smart technology through the logistics process, reach out to one of our in-house experts.