Virtual Warehousing: Definition, Benefits, & More

Allison Champion
6 min read
April 30, 2024
Modified: May 9, 2024


Juggling spreadsheets, chasing down stock levels across multiple warehouses, and struggling to fulfill orders efficiently across various sales channels—sound familiar?

For many businesses, traditional warehousing has become a logistics labyrinth. The good news is that there’s a way out. Virtual warehousing offers a centralized, data-driven solution that can untangle this inventory nightmare and streamline your fulfillment process.

What is Virtual Warehousing?

Simply put, it’s a digital representation of your inventory levels—whether it’s all located in one central warehouse or divided among several warehouse spaces across the country. It’s also called multi-location inventory management.

While a virtual warehouse operation offer a centralized view of your inventory levels, its capabilities extend far beyond simple visibility. Virtual warehousing’s true power lies in the ability to seamlessly orchestrate your stock across all channels and physical locations.

Imagine a unified system that gathers real-time data on everything from finished goods inventory to raw materials. This data encompasses not only what you have, but also where it’s located—across warehouses, distribution centers, or even retail stores. Virtual warehousing software acts as the conductor, bringing this information together to empower strategic decision-making.

Virtual warehousing relies on software to create a unified view of your entire inventory. This eliminates the siloed information often present in traditional warehouse management, providing real-time data and insights for smarter decision-making.

Benefits of Virtual Warehousing

Virtual warehousing offers a compelling value proposition for businesses of all sizes. By harnessing the power of virtual warehousing, businesses can unlock a new level of control, agility, and cost-effectiveness in their fulfillment operations.

Overall, virtual warehousing empowers you to:

  • Increase Customer Satisfaction: Faster fulfillment times and improved stock availability lead to happier customers.
  • Boost Profitability: Reduced costs, optimized storage, and improved demand forecasting can significantly enhance your bottom line.
  • Gain a Competitive Edge: By offering faster delivery and a wider selection of in-stock products, you can outpace competitors who rely on traditional inventory management methods.

Let’s look at some of the key benefits:

Scalability and Flexibility

Virtual warehouse solutions are inherently scalable. As your business grows and your inventory expands, you can easily add new storage locations to your virtual network. This flexibility allows you to adapt to changing market demands and seize new opportunities.

Does your business experience seasonal demand surges? Virtual warehousing allows you to adapt on the fly. New locations (even temporary ones) can be integrated into the system instantly, allowing you to strategically expand and even position inventory closer to customer hubs for faster fulfillment.

Cost Reduction and Efficiency

Virtual warehousing eliminates the need for manual inventory tracking and reduces storage costs by optimizing space utilization. Imagine a virtual system that analyzes historical sales data and product characteristics to recommend optimal storage locations for each product based on size, weight, and demand. This eliminates wasted space and ensures you’re maximizing the  operational efficiency of your physical storage footprint.

Enhanced Inventory Visibility and Control

Gone are the days of scrambling for stock information. Virtual warehouses provide real-time inventory visibility into your entire inventory, including location, quantity, and product details. With real-time insights into inventory movement, you can identify potential issues before they arise. You can proactively trigger automatic reordering when stock levels dip, ensuring a seamless flow of goods and uninterrupted sales.

Virtual Warehousing and Ecommerce

Rare is the ecommerce business that sells on one channel and one channel only. Brands need to meet customers where they are, and that means selling on your own website, on marketplaces, through social media, and more. This has complicated the fulfillment landscape.

The demand for fast shipping has also created the need for businesses to house their products close to customers, so many ecommerce businesses have more than one warehouse. How does one keep track of all that inventory when it’s physically spread out and being sold on multiple channels? Virtual warehousing helps ecommerce businesses track all of that inventory and more.

Here’s how virtual warehousing transforms e-commerce fulfillment:

  • Faster Order Processing: By having a unified view of inventory across locations, you can fulfill orders from the nearest warehouse, significantly reducing delivery times.
  • Reduced Shipping Costs: Strategic inventory placement allows you to leverage zone skipping and optimize shipping costs based on customer location.
  • Improved Customer Satisfaction: Faster fulfillment and reduced shipping delays lead to happier customers, boosting loyalty and repeat purchases.
  • Enhanced Omnichannel Fulfillment: Virtual warehousing allows you to manage inventory for all your sales channels, from online marketplaces to your own web store. This ensures a seamless customer experience regardless of where they choose to buy.

Implementing Virtual Warehousing

Ready to harness the power of virtual warehousing for your e-commerce business? Here’s a practical roadmap to get you started:

  1. Assess your current warehousing infrastructure: Take stock of your existing storage facilities, inventory management processes, and any limitations you’re facing.
  2. Determine your must-have features: Virtual warehousing solutions offer a variety of features. Identify the functionalities that are crucial for your business, such as multi-location inventory tracking, order fulfillment automation, or integration with your existing e-commerce platform.
  3. Integrate it with ecommerce platforms & tools: Seamless integration with your existing e-commerce tools is vital for a smooth workflow.  Look for virtual warehousing solutions that offer easy integration with platforms like Shopify, Magento, or WooCommerce.
  4. Train your team on software: Equipping your team with the knowledge to use the virtual warehousing software effectively is crucial.  Many vendors offer training resources, or you can consider investing in in-house training sessions.
  5. Monitor your performance: Track key metrics like order processing times, inventory accuracy, and fulfillment costs after implementing virtual warehousing. This data will help you identify areas for further optimization and ensure you’re maximizing the benefits.

Choosing the Right Virtual Warehousing Partner

Selecting the right virtual warehousing partner is crucial for the success of your implementation. Here are some key considerations:

  • Industry Expertise: Does the provider have experience in your specific industry? Understanding your product types and any special handling requirements is essential.
  • Technology and Scalability: Evaluate the robustness of their warehouse management system (WMS) and its integration capabilities with your existing software. Ensure the solution can scale to accommodate your future growth.
  • Fulfillment Network: Consider the geographic reach of their warehouse locations. Are they positioned to deliver efficiently to your target markets?
  • Pricing Structure: Compare pricing models and understand any additional costs associated with services like fulfillment or value-added services.
  • Customer Service: Assess the quality of their customer support. Do they offer dedicated account managers and readily available technical assistance?

How Flowspace Can Help

Flowspace offers a comprehensive suite of warehousing solutions that provides valuable insights and allows brands to take control of their inventory. Flowspace offers real-life flexibility with flexible storage capabilities and a national network of warehouses and a best-in-class inventory management solution that ensures nothing gets left behind on a warehouse shelf and customers get exactly what they want when they need it.

Flowspace boasts a network of warehouses across the US, ensuring efficient delivery options. Reach your customers faster and reduce shipping costs by strategically storing inventory closer to your target markets. Flowspace also allows you to scale your storage capacity up or down effortlessly as your business demands fluctuate. With our virtual warehouse solutions, you can ensure you always have the supply to match any level of customer demand.

Flowspace integrates seamlessly with your tech stack, from e-commerce platforms, to ERP systems, to CRM systems and more. Their user-friendly warehouse management system provides real-time inventory tracking, order automation tools, and insightful reporting for optimal inventory management.

Ready to unlock the potential of virtual warehousing with Flowspace? Get in touch today!

For more from Flowspace, be sure to read our blogs on distributed order management and dynamic slotting.

Written By:

flowspace author Allison Champion

Allison Champion

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.

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