Shared Warehouse in India: A Smart Cost effective 3PL Solution For Businesses

Owning or leasing a warehouse involves enormous capital investment, which may not be possible for SMB owners. Shared warehouse is a great alternative for them. Here, multiple businesses share warehouse storage space, labor, and resources.

Companies can rent only the space and logistics services they require for storing goods and products. It is a cost-effective option and particularly beneficial for businesses with fluctuating inventory demands in the market. Shared warehousing is not a new concept. It has evolved over a decade. One of the most crucial reasons for the increase in demand for shared warehousing is the rise of online shoppers.

As online shopping increases, e-commerce business owners find managing and storing their inventory challenging. Storing in a big warehouse can lead to high warehousing costs. It even requires long-term contracts, which are unsuitable for every business owner.

Shared warehousing is a great option to fulfill customer demands immediately without investing much money. They are equipped with advanced technology, ensuring efficient order fulfillment.

1. Definition

A single business exclusively uses dedicated warehousing, which uses warehouse logistics space, resources, and services to fulfill its demands. 

It allows a company to design the warehouse layout and optimize the storage according to its requirements. However, shared warehousing is used by more than one business. The warehouse space and resources are shared among various companies.

2. Cost

Dedicated warehousing involves high costs. The business has to bear the cost of leasing the warehousing facilities and maintaining staff and infrastructure.

It is suitable for large businesses with high-volume products. However, shared warehousing is a cost-effective option. The Company needs to bear the cost only for the space and resources utilized inside the warehouse. It is suitable for small and medium enterprises.

3. Flexibility

There is limited flexibility in a dedicated warehouse. It means that when the business expands in the future, it may not have space to accommodate its products. However, shared warehouses provide flexibility in scaling operations based on business needs.

4. Contract

A long-term contract is required to store products in the dedicated warehouse. But you don’t need such a long-term contract in the shared warehouse space.

1. Cost Efficient

Sharing warehouses can reduce business logistics costs. It eliminates the need to build infrastructure for product storage. Shared warehousing divides cost expenditures, age, maintenance and labor, and costs among business clients.

2. Scalability

Shared warehousing can accommodate a business’s products when there are seasonal demands or when the Company expands in the future.

3. Collaboration

Shared warehousing brings together businesses in various industries under one roof. So, there is a networking or collaboration opportunity in the shared warehouse.

Warehouse sharing has certain advantages and specific challenges, as listed below.

1. Limited Customization

Shared warehouse is designed to meet the needs of various businesses. So, a business has to compromise on the workflow, storage conditions, and layout. This can be an issue for a company with particular warehousing operations needs. For example, a pharmacy company can have problems storing the products in shared warehousing.

2. Inventory Management Complexity

Managing inventories for various businesses can increase the complexity of tracking or handling. There can be mistakes of misplacing items if robust processes are not utilized in the shared storage facility.

3. Data Security Risks

Sensitive information like inventory levels and product strategies are at high risk of exposure in shared warehouses.

1. Access To Advance Technology

Shared warehousing is usually accessed through advanced technology, such as warehouse and inventory management systems, real-time tracking, and many more. These systems increase visibility and accuracy and help business owners make correct decisions.

2. Located Closer To Transportations Hubs Or Target Markets

Shared warehousing is closer to the target markets or transportation hubs, reducing transit times and enabling fast ecommerce fulfillment.

3. Focus On Core Activities

Managing logistics operations solely is quite difficult. It can involve mistakes or decreased customer satisfaction if warehouse fulfillment is done at a different time. Shared warehousing takes responsibility for the Company’s supply chain operations.

Most shared warehousing uses advanced technologies, and, as a result, there is a lower chance of errors. This enables a business to focus on core activities like product development or exploring new market strategies. 

1. Small and medium-scale enterprises have limited budgets. They can’t build infrastructure for storing products or make long-term contracts with a contract warehouse. They should store their products in shared warehouses. They can share a shared warehouse’s rent and other resources with other businesses.
2. E-commerce businesses usually face unpredictable order volume. For example, a fashion business requires more space to store apparel during peak seasons like Diwali. In such a case, shared warehousing can provide scalability without incurring more money.
3. Startups and new businesses need more capital for storing products in dedicated warehouses. It can first store its products in shared warehousing and grow the business.

1. Location

The shared warehouse should be closer to your target markets or well connected to rail, road, and air. This will lessen B2B transportation costs and enable fast delivery to customers.

2. Transparent Pricing Model

Some shared warehouses include hidden fees for packaging or providing extra space. You must ask the shared warehouse partner about the detailed cost, including storage, value-added services, etc.

3. Size And Scalability

Your business’s products can fluctuate based on the season or specific festivals. The shared warehouse should accommodate the products at that time. To access the size and scalability of a shared warehouse and ensure that it should hold your business products at present and in the future.

4. Technology And Services Offered

Ensure that the sharing warehouse should provide value-added services like packaging and labeling. It should also be leveraged with advanced technology like inventory management systems.

5. Flexibility In Contracts

Long-term contracts can become a burden for small businesses. It would be best to choose a shared warehouse provider that offers contract logistics flexibility.

The demand for warehousing services is continuously evolving in India. India’s logistics industry was valued at around $200 billion in 2020 and is predicted to reach $380 billion by 2025. The Indian warehousing market is expected to reach $34.5 billion by 2027. Shared warehousing is a cost-effective logistic option for small and medium enterprises, startups, and e-commerce businesses. However, consider a few factors, such as the services offered, contract flexibility, and location, before forming a partnership with a shared warehouse solution provider.