Minimizing expenses is a crucial part of running a business. The less you spend, the more you make. It's as simple as that. One of the biggest ways retailers can lower their overhead is to cut back on their warehousing costs. These tips will provide some smart ways for you to save money and get the most out of your warehousing budget.
Owning and running a warehouse is quite expensive, especially if you have a fairly small store. You can significantly reduce your warehousing costs by outsourcing your warehousing to a third party logistics provider. Here at Overflo, we have flexible warehousing solutions to accommodate the growth of your business. In other words, you only pay for the amount of warehouse space you need.
If you try to run a warehouse of your own, you may end up with a lot of wasted space or more merchandise than you can logically handle. You will also need to worry about updating your inventory management system, training and maintaining your staff, upgrading equipment, and more. With a 3PL provider, those costs are split up between multiple clients, so each retailer spends much less money overall.
Are you paying for stuff to sit idle in the warehouse? If so, you may want to create a new marketing strategy to get rid of that excess inventory. Depending on the industry you work in, you may have a sale at the end of each season to clear out items you won't need for a year – "end of summer clearance sale." If there are products in the warehouse you don't think you'll ever sale, find a good organization to donate them to. This may feel like a loss because you aren't making money, but at least you're not paying for products to sit on the shelves.
If you haven't already looked at your warehouse's order fulfillment services, now may be a good time to do that. You will spend a little extra money having the warehouse do this for you, but it may lower your warehousing costs overall. The cost of order fulfillment is minimal, and it saves you from shipping products to a sorting facility and then having them shipped to the customer. You eliminate as many middle men as possible to get the product to your customers quickly. This will also boost your customer satisfaction, which will help your profits later. It's a winning solution all the way around.
Do an assessment of your warehousing costs every few months to see if there is something you're spending too much money on. This may be old inventory like we mentioned above, or it may be a service you don't see much benefit from. Talk to your warehouse about this so they can adjust your plan to meet your business needs. Then you'll have more money to spend on other areas of your business.
For more information about warehousing, Contact Overflo at 1-800-626-0616
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