Local Warehouse for Ecommerce Business: Consider a Co-Warehouse

As a small to medium ecommerce business owner, you may be under pressure to find a 3PL or dropship warehouse. There are a lot of benefits to outsourcing your inventory or shipping, but it does come with drawbacks. Lack of inventory control, increased costs, messy returns, and becoming dependent on someone else’s operation may not be the right move for your business. 

But with the high cost of space, shipping delays, and rising logistics cost, how can smaller sized ecommerce businesses find a warehouse that fulfills needs without breaking the bank? 

Enter co-warehousing. This particular type of warehouse is an ideal solution for growing ecommerce businesses that need to manage storage, cut delivery times, and sustainably manage costs while scaling. 

Co-warhouses offer space, convenience, and scalability without the drawbacks of a private facility or a third party operation. 

Types of Warehouses 

Before determining if a co-warehouse is right for you, it’s helpful to know your options. From home warehouses to smart warehouses, each warehouse is ideal for a specific business. 

Home Warehouse

Likely found in your basement, guest bedroom, or garage. This warehouse is great when starting out and is often the most cost-effective option. 

The downside: Home warehouses quickly become cramped and disruptive to home life, making it hard to stay organized and scale without errors. Not to mention there are little to no work/life boundaries. 

Storage Unit

Another cost-friendly option when scaling and managing more inventory. Storage units give you control of your goods without sacrificing a space you live in. 

The downside: There’s limited infrastructure (no packing stations, loading docks, or reliable climate control), which can create security, damage, and workflow issues. 

Fulfillment Center

Used by both larger organizations (like Amazon and Walmart) and rapidly scaling small businesses, fulfillment centers offer short-term storage with direct-to-customer shipping. 

The downside: You’ll lose control over the unboxing experience and fulfillment priorities while paying per-order fees that can eat into margins.

Distribution Centers

The “middle men” of the supply chain, distribution centers are often utilized to hold goods until it’s time to send them to the next place. 

The downside: It’s an added touchpoint and extra transit time, which increases complexity, costs, and the chance of delays or inventory mistakes. 

Public Warehouse

Leased to one or multiple customers and owned by a third party, this is a public warehouse that stores your goods (often also ships them for you).

The downside: There are often variable service levels and less customization. Your inventory and orders may not be prioritized. Especially if you’re a small client. 

Private Warehouse

Owned by one owner or company, private warehouses allow companies to have complete control of a space but at a high cost and with long leases.  

The downside: High fixed costs (rent, labor, equipment, insurance) can strain cash flow. Especially problematic during slow months or for businesses with seasonality. 

Co-warehouse

Owned by a third party, co-warehousers split the cost of a space between multiple tenants, making it an affordable and community oriented space to control and manage your entire ecommerce business. 

The downside: Relying on a shared space or resources can limit the customization and availability of certain items during busy times.

Smart Warehouses

A warehouse that uses cutting edge technology, like AI or robotics to improve efficiency in storage and shipping. Often ideal for larger organizations. 

The downside: There’s high cost and complexity for implementation, which often makes it impractical unless you have significant scale and volume.

Consolidation Warehouses

Similar to private warehouses, but the government is the landlord. Often these options are much more affordable compared to private warehouses. 

The downside: government-managed leases and processes can be slower, more restrictive, limited in availability and access, modifications, and day-to-day operations.

Why is a Co-Warehouse Unique?

A co-warehouse is a shared warehouse where multiple businesses store, pack, and ship products under the same roof. 

Key features include:

• Flexible leases, including short-term and long-term
• Access to loading docks, forklifts, pallet racks, shelving, and other equipment
• On-site fulfillment areas, offices, and meeting rooms

The main difference between co-warehouses and 3PL and dropshipping is that co-warehousing allows you to maintain complete control over your business while giving you the room and opportunities to scale. This can improve customer perception, inventory management, and returns processes. 

With the right processes, space, and warehouse management systems, many business owners find co-warehouses to be more affordable and better for the long-term goals than outsourcing. 

Why Co-Warehouse are an Ideal Fit for Ecommerce Businesses 

Co-warehousing offers flexibility and scalability because you only pay for the space and services you actually need, and you can scale up or down as your business changes. It’s also cost-efficient since you’re sharing utilities, maintenance, and equipment, reducing overhead compared to running your own facility. 

Beyond the numbers, the community aspect is advantage. You’re surrounded by other ecommerce entrepreneurs, which creates built-in opportunities to network, swap ideas, and learn from people facing similar challenges. 

Co-warehousing can also make day-to-day operations easier by giving you access to on-site support like staff, security, Wi-Fi, shipping carriers, and packaging supplies. 

By finding a space with close proximity to your customers, you can strengthen your local presence and brand appearance. Your returns processing, quality control, and restocking are faster and less complicated. 

How to Choose the Right Co-Warehouse 

When you’re ready to sign a lease, here are some things to consider:

1. Determine your needs, like storage size, shipping volume, and ideal locations given key markets.
2. Confirm necessary amenities like loading docks, office space, 24/7 access, front desk support, and carrier pickup frequency. 
3. Visit the space to ensure everything looks as it should and to meet the team managing the space.
4. Evaluate community culture given that these people will be your neighbors for at least a couple of months, to potentially years.
5. Pick a pricing model that fits your organization’s short-term and long-term goals, giving you room to grow without high bars that will be difficult to reach.

It’s Not Your Effort, It’s Your Setup

Imagine walking into your garage and barely being able to squeeze past towers of inventory and half-collapsed shipping boxes, with returns piled in one corner and packing supplies creeping into the walkway. 

Orders keep coming in, but instead of feeling excited, growth feels heavy because every task takes longer than it should. You spend more time searching for products and clearing space than actually running your business. 

Surrounded by half-packed shipments and a mess you promised yourself you’d organize “tomorrow,” it clicks that the problem isn’t your effort. It’s your setup, and something has to change.

… Sound familiar? Then it’s time to find a warehouse that grows with your organization, without forcing you to give up control. 

Discover how Polygon’s co-warehousing spaces are changing the way brands create, store, and ship products for ecommerce brands.