There are many types of warehouses, making it hard to choose the right path for your business. Today we’re discussing the different types of warehouses and the pros and cons of each so you can make informed decisions for your business.
What are the different types of warehouses?
There are seven main types of warehouses. Some terms are used as catch-all's for multiple types of warehouses, including distribution center (DC), fulfillment center, and simply, warehouse. The types of warehouses include the following:
- Public warehouses
- Private warehouses
- Cooperative warehouses
- Consolidated warehouses
- Distribution centers
- On-demand warehouses
Public warehouses are a type of warehouse that allows customers to rent space to store their products and fulfill their orders. These warehouses are often owned and operated by third-party logistics companies. Public warehouses are open to any company that needs space to store its products and are a great option for companies that don’t have the volume to necessitate their own warehouse and are also great for companies that have big seasonal changes in volume and need extra space during peak times.
In contrast to public warehouses, private warehouses are owned and operated by individual companies (like the warehouses that Target owns, for example). These warehouses are built to meet the specific needs of the company and are used exclusively for their own products, or if the owning company includes a marketplace, products from participating companies are included as well. Private warehouses offer customized warehousing solutions that are tailored to the specific needs of the company. They are typically built to meet the exact specifications of the products being stored and can include specialized equipment or storage systems. Private warehouses are a good choice for companies that have high volumes of inventory or specialized products that require specific storage conditions.
As the name indicates, cooperative warehouses are shared. They are owned and operated by a group of companies. These warehouses are typically located in areas where transportation is easily accessible and offer shared storage space for multiple companies and product types.
Cooperative warehouses offer shared warehousing solutions that allow companies to split the cost of warehouse space and resources. These warehouses are a great option for small or medium-sized businesses that do not have the resources to invest in their own warehouses but would prefer to keep fulfillment operations in-house, rather than using a public warehouse.
Consolidated warehouses are warehouses that are used to streamline distribution and fulfillment processes. These warehouses are typically owned by a third-party storage company which facilitates the combination of smaller shipments into larger more economical truckloads that have similar destinations.
Consolidated warehouses offer a streamlined distribution process that can help companies save time and money on shipping and transportation costs. These warehouses are a popular choice for companies that have multiple suppliers or vendors and need to consolidate their shipments before shipping them to their destination, often coming into play when a company has retail partnerships (ex: selling shoes at Nordstrom).
Distribution centers are large warehouses that are used to efficiently distribute products and fulfill orders; think Amazon fulfillment. These centers have a key difference from traditional warehouses; the strategy for operations focuses on stocking the type and quantity of products that will be sold within a given time. This contrasts with traditional warehouses that seek to stockpile inventory. As a result, distribution centers store products for a relatively short period and may stock a wider variety of products.
On-demand warehouses are a newer type of warehouse that offer flexible and scalable warehousing solutions. These warehouses are typically owned and operated by third-party logistics companies and offer storage and distribution services that are used and paid for on a per-use basis. This means companies pay for the space and fulfillment services when they use them. On-demand warehouses are a great option for companies that have seasonal or fluctuating demand for storage space. These warehouses offer flexible storage solutions that can be scaled up or down as needed, allowing companies to only pay for the space they need.
There are a variety of different types of warehouses that companies can choose from depending on their specific needs. Public warehouses, private warehouses, cooperative warehouses, consolidated warehouses, distribution centers, and on-demand warehouses all offer unique benefits and services that can help companies.
Our fulfillment partner, iDrive Fulfillment, has locations across the country that enable shippers to reach 98% of the U.S. within two days on a ground service. To see if our fulfillment options would be a good fit for you, start by filling out our contact form here!