Shared Warehousing 101: A Cost-Effective Solution For Scaling Ecommerce Businesses

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Ecommerce businesses face an important choice when it comes to warehouse storage—especially as they scale.

Typically, they have two main paths forward:

1. Dedicated warehousing: where a brand leases or owns an entire warehouse exclusively for its own inventory.
2. Shared warehousing: where multiple brands share space, resources, and operational infrastructure in one facility.

For many, dedicated warehousing is too costly and inflexible, especially for smaller brands or those with fluctuating demand. On the other hand, shared warehousing works by pooling resources with other businesses. This model enables ecommerce businesses to maximize warehouse capacity as their needs change.

In this guide, we’ll explore how shared warehousing can reduce costs, optimize delivery times, and meet customer expectations, all with the backing of ShipBob’s fulfillment expertise.

Shared warehousing is a fulfillment model where multiple businesses share a single warehouse and its resources, such as staff and equipment. Unlike dedicated warehousing, where a brand leases or owns an entire facility, shared warehouse spaces let brands split overhead expenses while paying only for the storage area they actually use. Thus, offering the flexibility to scale up or down based on demand while keeping costs low.

How shared warehousing fits into the ecommerce supply chain

Supply chains can be complex. Imagine trying to manage inventory across multiple regions, handle fluctuating demand, and meet customer expectations—all without overspending on storage. Shared warehousing simplifies this by offering flexible warehousing solutions combined with a robust warehouse management system (WMS) that’s designed to keep inventory organized, trackable, and ready for fast fulfillment.

For ecommerce brands with fluctuating demand, shared warehousing is particularly important in simplifying the supply chain. It combines the flexibility of on-demand warehousing with the reliability of a professionally managed setup. 

For instance, let’s say you run a swimwear company with high sales during the summer. Shared warehousing lets you ramp up during peak season and scale down in the off-season, so you’re only paying for what you need when you need it.

Industries and businesses that benefit from warehouse sharing

As previously mentioned, shared warehousing is particularly useful for ecommerce warehousing needs—especially for brands with unpredictable demand or limited budgets. Here’s how different types of businesses can make the most of shared warehousing to meet their warehousing needs without overcommitting:

• DTC brands: DTC brands often need to scale quickly. Shared warehousing provides access to a warehouse as a service solution, allowing these brands to expand storage on demand and meet surges in order volume.
• Startups: Startups often test the waters in various markets. Shared warehousing provides a cost-effective way to store inventory close to new customer bases without the hefty investments required for a dedicated warehouse setup.
• Seasonal product companies: Brands with high seasonal demand, like holiday decor or summer apparel, benefit significantly. Shared warehousing allows them to ramp up space when they need it most and scale back down during slower periods. It’s a flexible setup that aligns with their cyclical fluctuations.
• Niche product retailers: Smaller ecommerce brands focusing on unique or niche items often need limited storage space. Shared warehousing gives them access to professional storage without the overhead cost burden of a dedicated warehouse.

With shared warehousing, these businesses get the best of both worlds—professional, efficient storage that grows with them, without tying up all their resources.

Choosing between shared and dedicated warehousing depends on factors like budget, flexibility, and warehouse management needs. Here’s a deeper look at how these two models compare.

Cost and resource allocation

When it comes to managing costs and resources, shared and dedicated warehousing each brings a unique approach with its own benefits and drawbacks.

• Shared warehousing: The pay-as-you-go cost structure allows brands to only pay for the space and services they actually use, which is budget-friendly and adaptable. However, shared costs may include fees for additional services or resources that can vary, making it slightly less predictable if your needs fluctuate a lot.
• Dedicated warehousing: While this model requires brands to cover the full costs of an entire warehouse, which may be higher, it also offers complete control over expenses without the risk of shared costs increasing unexpectedly. The downside is that businesses bear fixed costs even if their usage is low, making it more challenging for those with fluctuating demand.

Flexibility and scalability in both models

Adjusting storage space to match your business’s growth or seasonal demand shifts can be a lot easier—or harder—depending on the warehousing model you choose.

• Shared warehousing: This model provides strong flexibility, allowing brands to easily scale storage up or down as needed without a long-term commitment. However, because space is shared, availability may occasionally be limited if other brands are also scaling up, potentially impacting immediate access to additional space.
• Dedicated warehousing: While scalability may be more limited in this model, it gives brands full control over space usage without competing for additional room. The tradeoff is that expanding requires additional investment or a larger facility, which may be less practical for businesses needing quick, short-term scaling.

Logistics and fulfillment speed considerations

How efficiently you can fulfill orders and have them delivered to your customers can vary widely depending on whether you’re using shared or dedicated warehousing.

• Shared warehousing: Leveraging a distributed warehousing network with inventory spread across multiple locations can reduce delivery times and lower transportation costs. However, without the proper tech in place, coordinating inventory across multiple sites may add complexity to inventory management and tracking for brands that prefer a single-location approach.   
• Dedicated warehousing: Operating from a single, centralized location offers simplified inventory tracking and management, as all products are housed in one place. On the downside, if customers are spread out, centralized warehousing can lead to longer shipping times and higher transportation costs for distant regions, limiting the speed of delivery.

There are a number of factors to consider when deciding whether to choose shared or dedicated warehousing. Below is an overview of how shared and dedicated warehousing stack up across critical features.

With about 50% of businesses failing within the first five years of starting, it’s estimated that 82% of them close their doors due to cash flow problems. Taking on a dedicated warehouse is a huge risk for SMBs whereas shared warehousing reduces the need for large upfront investments.

Cost-effective scalability for growing brands

Growing brands often need to scale quickly without overcommitting financially. Shared warehousing allows businesses to do exactly that. By paying only for the space and resources they use, brands can grow their storage and fulfillment capacity at their own pace. This flexibility gives growing brands room to expand without the pressure of long-term commitments, letting them focus resources on other areas like marketing and customer experience.

Lowered operational overhead

One of the biggest perks of shared warehousing is reduced operational overhead. Rather than hiring, training, and managing warehouse staff, brands using shared warehousing benefit from a fully staffed facility. They also avoid the costs associated with security measures, building maintenance, and specialized equipment. For small businesses, these cost savings can make a huge difference.

ShipBob’s fulfillment solution takes the concept of shared warehousing to new heights thanks to our large network of fulfillment centers, smart warehousing technology, and commitment to helping brands scale. As a third-party logistics provider (3PL), ShipBob streamlines the fulfillment process, so businesses can focus on growth.

Leverage distributed inventory for faster delivery

With ShipBob’s distributed network of distribution centers, brands can store inventory in multiple locations across the country, reducing the distance to customers and shortening delivery times. ShipBob’s multi-location setup is perfect for brands looking to scale without compromising on delivery speed.

Optimize stock distribution with our Inventory Placement Program

ShipBob’s Inventory Placement Program (IPP) automates the process of distributing inventory based on demand patterns. For example, if a brand experiences high demand in the Midwest, ShipBob’s IPP will allocate stock to nearby facilities, ensuring inventory levels are always where they need to be. This level of dynamic storage helps avoid costly overstocking or understocking issues and keeps operations running smoothly.

Enable 2-day shipping through shared resources

In today’s market, fast delivery is an expectation. ShipBob’s shared warehousing model lets brands offer 2-day shipping options without the logistical strain of building a dedicated fulfillment network. This is especially beneficial for smaller brands or those in the early stages of growth, that may not have the resources for multiple dedicated warehouses.

Get started with ShipBob

If you’re interested in ShipBob’s warehousing and fulfillment solutions, fill out this form to get started.

Here are answers to commonly asked questions about shared warehousing.