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Storage and Warehousing: Key Differences to Know

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Danish Khan

Content Writer @ Shiprocket

May 4, 2023

7 min read

As eCommerce businesses grow, managing inventory can become a challenge. If you have excess inventory, you may be wondering whether to store it or move it to a warehouse facility. Although the terms “warehousing” and “storage” are often used interchangeably, they actually have different meanings that are important to understand in order to leverage the benefits they offer. In this article, we’ll explore the differences between warehouses and storage units so that you can make the most of their advantages.

storage vs warehousing

Understanding Warehousing and Storage: Definition, Types, and Benefits

Let’s begin by defining the two terms that are routinely used in logistics and shipping services. 

Storage 

When businesses or manufacturers decide to hold their goods and materials at a small scale and volume, it is called storage. More often, the term is associated with household storage like furniture, clothing and holiday decorations. Similarly, businesses may hold their inventory in storage for a shorter period in comparison to goods they hold in a warehouse. More importantly, the goods are stored because they are not being used currently and may be used in the future. Storage can be in any temporary location, such as a small room or store room that can hold the goods. There are usually no specially designated spaces for storage.

The different types of storage facilities are – self-storage and mini-storage. Sometimes dynamic semi-automatic and automatic systems of storage facilities are also available.

Warehousing

Warehousing is defined as the process of storing materials and goods in large volumes. These goods could be for domestic consumption or overseas markets. Retailers, distributors or manufacturers commonly use warehousing services to hold their goods until they are needed next. The physical location where large quantities of goods are held is defined as the warehouse. 

The Differences Between Warehousing and Storage

In this section, let us look at the factors which distinguish warehousing from storage facilities –

  1. Location and accessibility

Warehouses require larger spaces and are mostly located in remote areas where large land mass is available. They are located near transportation hubs for the quick shipping of goods.

On the other hand, storage facilities are located mostly in residential areas since they need to be easily accessible to customers.

  1. Capacity

Warehouses are primarily used by businesses for commercial purposes. Therefore the size of warehouses is very large, and designated spaces and equipment are installed for unloading and loading. The goods stored are generally wholesale items and very large equipment. 

On the other hand, storage units hold very small items such as household appliances or personal items.

  1. Security

In warehouses,  monitoring and securing the facility is a very significant activity. The large area is generally open for easy access to trucks. The massive spaces are a challenge to secure. Technology-driven security equipment such as closed circuit television record the activities across the facility, helping in maintaining security across facilities.

On the other hand, storage units are small spaces and may not have complicated security processes. They often remain out of access to common people and are safer. Storage facilities are easier to monitor and can accurately track people accessing the facility.  

  1. Cost

Warehouses involve a lot of costs as they are larger facilities and often carry a rental cost or a lease cost. Additionally, the overall maintenance of these large spaces is expensive. Security and additional maintenance are recurring costs. 

On the other hand, storage facilities are much smaller, compact facilities and do not have high overheads such as rental security maintenance and other add-ons.

  1. Services

Warehousing provides a range of services like packaging, shipping and transportation. On the other hand, storage facilities do not offer such services.

Thus, the above comparative analysis of warehousing services and storage facilities clearly shows there are some differences in terms of size, capacity, layout and services each of them provides. You can select either facility based on your business’s specific needs.

The different types of warehouses are – bonded, public, private, climate-controlled warehouses or distribution centers. 

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Let us take a quick look at the types of warehousing and storage. 

Types of Storage and Warehousing

Choosing the right storage or warehousing facility is crucial for an eCommerce business. Here are the different types of warehouse and storage facilities that are commonly used by retailers, manufacturers and other businesses:

1. Public Warehouses

This type of facility is mostly owned and operated by service providers who handle end-to-end services like – storage and distribution for several clients. These facilities charge on a per-use basis for short-term storage and distribution services.  

2. Private Warehouses

These facilities are owned by companies for their own warehousing uses of storage. These facilities hold goods for long-term storage and distribution.

3. Distribution Centers

These types of facilities are designed for the fast-paced movement of goods. They receive goods from manufacturers, suppliers, and resellers and then store, sort, and distribute them to retailers or end customers. In the process, they offer a variety of value-added services like assembling and labelling to prepare products for shipment.

4. Climate-Controlled Warehouses

These facilities maintain a specific temperature and humidity level to ensure sensitive goods are well protected. These are mostly used in industries that deal with perishable foods, pharmaceuticals and electronic appliances.  

5. Self-Storage Facilities

These storage facilities are typically used by businesses for individual storage. These can be rented facilities that customers use to store their personal belongings. 

As you can see, the diverse range of storage and warehousing options provides eCommerce businesses with many choices to find the most suitable facility for their products and goods.

Benefits of warehousing and storage

The comparative study of warehousing and storage facilities illustrates the conceptual difference between the two facilities. However, there are several benefits to warehousing and storage. These are as follows:

  1. Increasing goods security

The primary advantage of using a warehousing facility is that the goods stored are well protected and are unlikely to be stolen or damaged.

  1. Better organised

Warehouses and storage facilities help businesses to organise inventory for better management. These practices are more sustainable since there is easy review and evaluation of stock level.

  1. Lower cost

Warehousing and storage facilities are important factors in helping companies save money on transportation costs and shipping costs.

  1. Enhanced flexibility

Warehousing facilities and storage units offer businesses choices in the manner of storage and access they want for their goods.

Although there are benefits of using warehousing and storage facilities, there are some disadvantages. The limited space, high costs of renting the warehouse, and difficulty to access because of remote location, along with the sudden issues with packaging and transportation, may influence business decisions in choosing the storing facility or warehousing provider.

Conclusion

The above discussion clearly identifies the differences between warehousing and storage facilities. While warehouses offer large spaces and greater security for storing goods, storage facilities are more compact and easy to access. Storage units are small, and shipping is immediate. As an eCommerce business, if you are looking to store extra inventory, it is ideal that you find the best solutions according to the needs of your business. One such solution for storage facilities and warehousing services is offered by Fulfilment service providers. Our wide network of warehouses and storage facilities available across the country provides secure storage and reliable shipping services for eCommerce businesses. Click here to know more.

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Frequently Asked Questions(FAQs)

How has Technology impacted the warehousing and storage industry?

New technologies like automation and robotics have made warehouses and storage facilities more efficient and cost-effective. These innovations have also created new job opportunities for workers.

How do housing and storage facilities manage inventory?

Both of them use tools and techniques to manage inventory. The common methods are –  barcode scanning, RFID tracking and using inventory management software.

What costs are associated with storing items in a warehouse?

Storage costs in a warehouse can include expenses for things like rent, electricity, software, and personnel. These costs are typically calculated as a percentage of the value of the inventory being stored.

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