How an Online Seller Can Improve Sales and Profits by Organising Warehouse Processes More Effectively

Online sellers sometimes overlook warehousing in the excitement and stress of starting an eCommerce business, but effective warehouse processes are key to saving money and maximising customer satisfaction in your online retail business – so ignore them at your peril.

To talk about warehouse processes in detail I'm going to split them up into five areas; storage, picking, packing, shipping returns and last but by no means least, returns.

I’ll talk about each of these areas in detail below but first of all I want to talk about the balance between maximising storage and making picking as fast as possible.

The Balance between maximising storage and making picking as fast as possible

As in many other areas of life getting your warehouse processes organised for maximum efficiency is about achieving the right balance, if you maximise storage capacity by ramming your warehouse full of product you will obviously impact the efficiency of the picking process, and similarly if you lay everything out in easy to find form across the warehouse floor picking may work perfectly but storage capacity will be woeful. Delivering the perfect process takes skill and experience but most of all it takes great software and systems.

Efficient but usable storage focuses on maximizing the use of available space to store as many products as possible. This approach involves the use of High-Density Storage Systems that utilize vertical space with shelving, pallet racking, or automated storage and retrieval systems (AS/RS) to store products more densely.

Designing the warehouse layout to minimize unused space and ensure that products are stored in a compact manner is important, but the key is implementing quality inventory management systems to track product locations and optimize storage based on product size, weight, and demand.

Fast picking, on the other hand, aims to minimize the time it takes to retrieve products from storage and prepare them for shipment.

Pick path optimization is the key here, using your historical sales data to design pick paths to minimize travel time and distance for warehouse workers for as many orders as possible – in essence this just means shelving items that are often ordered together in close proximity to each other to allow faster picking.

In larger spaces, you can also speed up picking by using zone picking, dividing the warehouse into zones, with workers assigned to specific zones to reduce travel time, this is often combined with batch picking, grouping multiple, similar orders together to pick items in batches, reducing the number of trips needed to pick a group of orders. This normally works best when each zone is 10,000 square feet (1,000 square meters) or bigger so you don’t need to worry too much about picking zones in smaller warehouse spaces.

There are also hardware solutions that you should consider voice picking technology is very popular at the moment. Voice picking technology, also known as voice-directed warehousing, is a hands-free, paperless system that uses voice prompts from a mobile device to guide warehouse workers through the order picking process. In an online retailer's warehouse, this technology can significantly enhance efficiency and accuracy. Workers wear headsets connected to a mobile device that communicates with a software system like eTail Support. The system provides verbal instructions, directing workers to specific locations and items to pick.

This method allows workers to keep their hands free for lifting and handling products, reducing errors and speeding up the order fulfilment process.

By eliminating the need for paper lists voice picking can speed up picking operations, leading to faster and more accurate order processing, ultimately improving customer satisfaction, however for many users paper based picking lists can be the optimal solution - it all depends on your type of products your warehouse size and your order volume.

Software and Data are Key

As in many areas of running an e-commerce business software and data are the most important tools for making sure that your warehouse and warehouse processes are as efficient and effective as they can possibly be.

By analysing historical order data, a partner like eTail support can help you to understand where your process is can be improved and then to implement the improved process is underpinned by a robust software solution.

An analysis of historical order data is vital to understanding if picking can be accelerated by the rearrangement of storage locations to use wave or zone picking, Every business is different on the answer to what is best for your business is always found in the data.

Finding the Balance

Balancing efficient storage and fast picking requires a strategic approach that considers the specific needs of the e-commerce business.

For the majority of businesses the amount of space that you have available in your warehouse is fixed and saving 10% of your warehouse space will not reduce your costs at all it will simply leave 10% of the warehouse that you're paying for unoccupied, well the number of hours that you pay workers to work in your warehouse is easier to reduce,  for this reason we normally focus our efforts on maximising picking productivity within the given space in order to reduce cost by minimising the number of work hours that are required to ship all of your orders

Here are some strategies that we have used successfully in the past:

1.      ABC Analysis: By classifying products into three classes based on their sales frequency (A: high, B: moderate, C: low) and storing high-frequency items in easily accessible locations while using dense storage for low-frequency items we can rearrange your warehouse to speed up picking overall.

2.      Use of Hybrid Storage Systems: By combining different storage systems, such as high-density pallet storage for bulk items and more accessible bin based storage at low level for fast-moving items we can increase storage density without affecting picking speed.

3.      Data-Driven Decisions: Leveraging data analytics to continuously monitor and optimize storage and picking processes based on real-time demand and operational performance.

4.      Flexible Layouts: Designing warehouse layouts that can be easily reconfigured to adapt to changing product mixes and demand patterns, this works especially well in businesses with a high degree of seasonality.

But lastly and by no means least the most significant change to affect the efficiency of warehouse operations is usually a reduction in the long term storage of stock, replace it get where possible with just in time deliveries which are cross docked to ship immediately after delivery in response to recent customer orders.

This requires deep integration between your software systems and those of your suppliers, but once these are put in place the benefits in terms of warehouse efficiency and overall cash flow can be amazing.

In conclusion, the trade-offs between efficient storage and fast picking in e-commerce warehouses are inevitable. However, by implementing strategic approaches and leveraging technology, businesses can find a balance that maximizes both storage efficiency and picking speed, ultimately enhancing overall warehouse performance and customer satisfaction.

Now let's look at each of the five areas of warehouse operations in detail and consider ways that each could be improved incrementally to give significant overall benefit.

Storage

Selecting an optimal storage strategy for your ecommerce warehouse is key to its efficiency.

More than any other aspect of warehouse operations storage depends on the exact type of products that you are selling, furniture just needs more space than electronics and any kind of food or drink product has considerably different storage requirements than fast moving consumer goods, so I'm not going to go into as much detail here as I will in the other sections, if you would like us to look in detail at your particular requirements please get in touch through the link here, but there are a couple of things to consider that effect all products.

The first thing to consider is that space costs money, if you are based in the UK you will probably pay between £40 and £200 per square meter per year in 2025 - That's just enough floor space to hold one standard pallet. It makes a lot of sense to rent the smallest warehouse space that you can and maximise the use of each square metre by using an appropriate shelving system to take advantage of the height of your space as well as the floor plan, but if you are committed to a warehouse for a number of years to come it makes sense to utilise the space to make your picking process as efficient as possible and hence reduce your staff costs as much as possible.

The most important thing to consider when planning your storage space is to minimise travel time when picking products by placing your faster moving products closer to the location where your staff will pack orders and then to consider locating products which regularly shipped together in adjacent locations.

That seems like a very simple process but it requires a deep analysis of historical order data to get it right and of course this process must be ongoing as order patterns will change over time.

Picking

An efficient warehouse allows for faster and more accurate picking and fulfilment while reducing costs by avoiding unnecessary work and optimizing energy use. A successful workflow begins with careful layout design, effective process management software such as eTail Support and an effective labelling process; followed by data-driven optimization through detailed analysis.

Picking and order processing are crucial components of online ecommerce operations, and any inefficiency will alter a shipment timeline and negatively affect both customer experience and bottom line.

Some picking methods work better for certain sizes or types of distribution centres and products than others, such as zone picking. This approach divides SKUs among various zones across a warehouse and assigns workers; accordingly, workers then move bins, carts or boxes from one zone to the next in preparation of orders being shipped out for shipment - allowing multiple sets of eyes to examine each order while being easier on employees' backs.

Working with experts like eTail support to carefully analyse product data and historical order records can help you to decide which picking methods will be right for your business.

Packing

Warehouse teams can use warehouse systems more effectively when receiving, storing, picking and packing orders for shipment. Optimizing facility layout and creating user-friendly systems for inventory storage will make it easier for employees to locate products, create orders and pack packages faster and reduce order fulfilment times.

One effective strategy for improving packing and shipping processes is organizing packaging materials like boxes, tape and scissors into separate areas according to type and size. This makes it easier for employees to locate what they need quickly while decreasing errors while saving time through reduced trips to storage facilities.

Other strategies for streamlining packing and shipping processes may include employing batch scanning whenever possible, organizing products by type or size and packaging them accordingly for specific shipping courier partners. By streamlining such processes employees can work more quickly and efficiently.

Warehouses should regularly review their inventory to decide what's the most efficient for them to keep on hand. Many businesses use ABC analysis to establish an orderly hierarchy of products; "A" items (high value) being stored closer to the packing area than slower moving or lesser valued ones (spare light bulbs for lamp manufacturers or tote bags for footwear retailers). This helps maximize efficiency by ensuring fast movers are always available and perishable or date sensitive items are sent before their deadline has expired.

Shipping

Shipping is the final stage of the outbound order processing operation and involves making sure products leave your warehouse on time and reach their correct destinations safely and on schedule. Shipping should run smoothly; any missteps or inefficiencies could erode customer satisfaction significantly; its success relies on all previous processes including ordering, put away, picking and packing as well as organizing to maximize efficiency and reduce costs.

Maintaining orderly supplies enables employees to quickly and accurately prepare orders, reduce moving products around and therefore prevent injuries to both workers and items, while making supplies such as boxes and tape easier to find - helping employees work more efficiently with orders before getting them ready for shipment.

It is also vitally important to profitability that you use the right Courier for each order, this is especially important if you ship orders in a great range of different sizes and weight and categories. Each courier is typically optimised for items of a particular size and weight, for the vast majority of online retailers the cheapest available option for very small items is a postal service however larger items are often more economic to send with a specialist courier. Maintaining accurate product data and using software that can act on that data to select the right shipping method for each order is very important to keeping shipping costs down. eTail Support can help with this, please don't hesitate to reach out if you think that we could help you in this area.

Many online retailers use drop shipping where products are sent directly from their suppliers to their customers as a part of their logistics processes To minimise stockholding of items that are sold infrequently or for items that are difficult or expensive to store. But be aware that effective drop shipping requires good software with comprehensive integration.

Another effective method for optimizing inventory is cross-docking, in which goods are shipped directly to customers as soon as they are delivered to your warehouse, eliminating the need for put away and subsequent picking. This eliminates the need to store large amounts of stock for extended periods, which significantly cuts operating costs. Warehouses may also employ Just in Time inventory management practices to reduce the amount of stock stored at any one time.

Both types of process require high quality software systems integrated with your sales channels and your suppliers to ensure that automated orders can be placed as quickly as possible after you have received orders from customers. You can talk to eTail support to see if this kind of process can be set up to help optimise your business.

Returns

I think it's fair to say that returns are the bane of any online retail business, but I think it's also fair to say the improving the returns process is the number one way that most online retail businesses can improve their profitability.

Doing returns right pays.

The key part of the returns process should be to manage returns as quickly as possible add to return the maximum proportion of rejected items to saleable stock as quickly as possible.

The next most important part of the process is to dispose of rejected items which cannot be returned to saleable stock as quickly as possible for the maximum amount of cash. This can involve using dedicated channels such as eBay to dispose of non-perfect items all simply combining them into large batches and auctioning them off to traders.

The number one mistake that I see retailers make over and over with returns is to simply heap them up in a corner of the warehouse and ignore them, this leads to much bigger losses in the long term.

Once again in the area of returns data analysis is very important, identify products which are returned more regularly than they should be is the first stage in fixing any problems with those items. In the past we have identified items which were incorrectly listed, which is a quick fix add items which were simply faulty throughout the batch which is more complex, but in any case high returns rate is often a sign of a product which is not worth selling and taking the appropriate action quickly reduces losses on such a product.

The eTail support software can help you to improve your returns processes, identify items with a higher than normal return rate and find solutions to the issues that cause returns, reach out if you'd like to know more.