Remote warehousing is the next generation of the drop shipping retail fulfillment method. They are quite similar but the remote warehousing has significant benefits which can help you run your business more efficiently, safely and reliably.
This article is not directed to the drop shipping model, but if you already know details about that e-commerce method, the text will remind you of that one as you read further. We will explain to you what remote warehousing is and highlight the advantages for you to consider while setting up an online store or when thinking about improving your business model.
Please note, that as we are not lawyers, we can’t offer legal advice about how to set up a business officially in your state. We highly recommend you to seek local legal advice or contact a local accountant.
- What is remote warehousing?
- What are the benefits of remote warehousing?
- What should you do to get into remote warehousing?
- How can you succeed more with your Shopify store?
Remote warehousing is a unique retail fulfillment method. Probably you won’t find suppliers saying “we have a remote warehousing service”. However, if they drop ship, they are very likely to be able to help you to implement the remote warehousing model.
If you want to be more successful with your business you should think out of the box and learn more about new opportunities.
Running a remote warehousing business means you can kickstart your online Shopify store with small capital investment. There is no need to stock real inventory, you will have it virtual and remote. It makes the whole business more “owner-friendly” because paying for the products beforehand would require upfront cash. How do you get the suppliers’ items into your store? They just need to give you a product data feed file that contains every necessary information about the items the suppliers stock.
This model is about working with local suppliers rather than ones from overseas—it’s highly recommended but doesn’t necessarily have to be done this way. However, by associating with local companies makes the shipping faster and the cooperation is usually more efficient. You don’t get products from marketplaces like eBay, AliExpress or Amazon. Being in a partnership with real local suppliers means you can have quality products in your store. Also, you can test the items, there is a stable warranty service, the shipping is not complicated to manage. You can easily meet the supplier, and the communication is local. You can avoid talking with a far remote party which may lead to miscommunication. The local supplier won’t disappear without a trace, and it can develop into a long-term collaboration.
The money moves in terms of customer >> online store >> supplier. As for the orders, customers will purchase on your site, you will summarize these details then give them to the supplier.
One of the most important factors that makes this method unique is that the supplier delivers the parcels to you (to the retailer), and you forward them to the customers. It has a lot of advantages, we will talk about it in detail hereinafter.
However, you don’t have to worry about where to put those items. As you won’t get a bunch of orders in the beginning, your garage, kitchen or living room will be spacious enough to contain the products your customers ordered. If your store skyrockets then you can afford to have a real warehouse, to associate with a fulfillment center.
You can think about remote warehousing as drop shipping if you want, with the only difference that the packages will arrive to your place first from the supplier and not to the customers directly.
After you found out what this retail fulfillment model is, it’s time to elaborate on the beneficial factors for your next decisions.
- Small capital investment: Only a small capital investment is needed if you want to run your business using the remote warehousing model.
- Virtual products: You don’t have to stock any inventory, you have virtual products.
- Products arrive together: When a customer orders more products from you, and these products are from different suppliers, the customer won’t receive the items in seperate packages on different days. The parcels get to your place where you collect all of them together and then you can send them in one package to the customer.
- Unique products: If you choose to sell products from real suppliers and not items from marketplaces like AliExpress, you won’t be just one in a million. You can sell unique products, not those that everyone else sells, and which might have poor quality. A bigger role in e-commerce is granted if you work with individual suppliers and get special products from them.
- Known quality: As the products arrive to your place, you can first check their quality, whether they are damaged or not, whether they are the exact same items the customer ordered or not.
- Unique packaging: You can wrap the products up in a unique style that you choose. You can whitelabel the package.
- No reliability problems: There won’t be any problems with reliability. You contact the supplier, you will work together for the long run. You can talk with them anytime about any questions and resolve any issues before they become a real problem.
- Quality products: You can avoid selling poor products in your Shopify store. Say yes to high-quality ones from real suppliers who maintain their own business, who have their own websites or systems for example.
- Gifts, greeting cards: You can attach small gifts beside the ordered items, also, you can put brochures in the box or a nice greeting card. These are useful public relation (PR) or marketing tools.
- Quick delivery: The orders arrive within a couple of business days if you choose to work with local suppliers. You don’t have to worry about the fact that you are a third party (supplier-retailer-customer).
- Low delivery cost: The delivery cost is low as there are no long distances in the shipping process. You can use free delivery headlines. Your product prices can include delivery where you as the retailer add the shipping cost to your price margin. You need to pay it, so your income will be less.
- Low prices: You can have lower prices in your store. If you are reselling products from retail marketplaces (for example AliExpress) you set the price margin to products for monetization purposes. So the price will be higher than it is in the marketplace, and nobody will want to buy the items because they can get those cheaper. The most important factor here is that probably the seller on a marketplace is not the one who originally produced the items. They are also resellers (as you will be), so there are more price margins added to the products, and the price will be higher. However, if you get products from real local suppliers, you will be the only one who will set the price margin for the products. Also, you can get the products discounted from real local suppliers. The prices depend on the certain supplier and product type.
- Test products: If you want, you can ask for sample products to test from the supplier. You will probably have to pay for it, but it’s worth the money. It’s better than selling items you don’t know the quality of, and disappoint your customers or not meet their expectations.
- No lost packages: The products the customers order most likely won’t have a long trip like other ones arriving from marketplaces or from a distant place. They won’t be just a part of the huge product heaps on airplanes’ or ships’ long transit routes. If you can work with courier services, you can feel safer. Even if there would be some trouble with the parcels, you can always track them and sort out any issues by yourself or with the local supplier you cooperate with.
- No language problems: There won’t be problems with the language when working with a local supplier. You can understand each other easily. Also, don’t forget that if you work with parties from marketplaces, you would have to face communication issues because of broken English.
- No customs duty or VAT problems: If your customers order goods from reliable local suppliers, they don’t have to worry about customs duty or VAT issues. If you work with real wholesalers, you can also cooperate with courier services. Please note, everything depends on the certain country, and the mentioned statement is only true if you work with suppliers from the same state.
- No warranty problems: The handling of warranty issues are not problematic. There’s a place to return the products if need be, and there’s a chance for a refund. The service is fast, the supplier is reliable.
- Banks cooperate: The method of remote warehousing is safe for everybody in the chain. There’s nothing to worry about, also banks will cooperate because they know the local supplier won’t disappear without a trace. Also, there has to be a real, registered company behind your service and the supplier’s service as well so that the banks won’t suspend your account.
You just have to ask the chosen local supplier who you find trustworthy if they can work with you using this remote warehousing retail fulfillment model. Let them know everything about this e-commerce method. Ask if it is okay for them to send each product to your place, tell them that it would be a mixture of the standard drop shipping and the standard commerce model. You also need to contact a courier service so that they can help you with forwarding the packages to the customers from your place.
You have to manage your products correctly and efficiently while running your e-commerce business. You can forget about incorrect product inventory info in your online store, the data can be constantly up-to-date. One of the most important factors is that you don’t have to carry out the management process manually. You can save money and time. You don’t have to maintain it all day and all night long, and you don’t have to hire more people to do it for you. A Shopify application like Syncee can do all of these automatically for you.
- How to find suppliers for your online store?
- How to find your niche product?
- How to start a drop shipping business?
- Drop shipping vs. Remote warehousing
Content manager and e-commerce adviser at Syncee. Her passion is strong for e-commerce novelties, online stores, and Shopify. She is committed to helping others succeed by her writings.