Warehousing Wholesale e-Business Inventory

Strictly drop shipping wholesale e-businesses have no need for warehouse space. It is one of the many benefits of running a drop shipping wholesale business. Successful drop shipping e-biz owners can grow their business by expanding the ways in which they sell inventory. The most common form of growth is reinvesting profits into a retail business selling wholesale items. Moving beyond drop shipping wholesale items, inventory storage becomes an issue. There are three warehouse options for wholesale e-Business owners to consider.

Use Your Most Convenient Warehouse — Your Home

A small retail business selling wholesale, overstock, and liquidated items is usually stored suficiently in a private home. This is for a wholesale e-business owner looking to sell select wholesale items at retail prices. We are not talking truckloads or even pallets of wholesale items; more like buying wholesale caseloads to sell items individually at retail prices. Wholesale products can be sold for retail prices in a variety of outlets. Easy places to start are on other web properties; Internet market sites like eBay, Craigs List, or local classifieds; or in low-cost retail space such as a mall booth, table at a swap meet or flea market, and established businesses like salons or consignment boutiques.

Success in selling wholesale items at retail prices is addictive! It won’t be long before a personal home living space is outgrown as adequate warehouse space. Before using a private home for inventory storage, there are a few concerns an exclusive drop shipping wholesaler should consider.

• Holding physical inventory of wholesale items changes sales tax requirements, and tax write-offs. Wholesale e-business owners transitioning from strictly drop shipping to retail sales of wholesale items should familiarize themselves with pertinent tax law or seek the advice of a tax professional.
• Home insurance policies frequently treat business inventory differently than personal possessions, if the business inventory is even insured under the existing home insurance policy! Contact your home insurance company to learn details and possibly pay for a policy rider to cover the value of wholesale business inventory in the event of an emergency.

Outgrown the Home Garage, Renting Personal Storage Space as a Warehouse

The next warehouse option for wholesale e-business owners also involved in retail sales is a local personal storage unit. There are many benefits for selecting personal storage space over a private living space. First, the private living space may not be ideal to accommodate wholesale stock. This is especially the case for small living spaces like apartments, or even large homes with many family members. No sense in forcing your family to literally trip over your new retail business in the hallway!

Also, personal storage space companies are required to carry insurance on the contents of every rented space. It may not be as much coverage as a wholesale e-business needs. Insurance in this case is typically a set number of cents per pound. However, this insurance coverage incorporated into the rental price can make other business inventory insurance premiums more affordable. Every personal storage space is different, but here are some of the issues wholesale e-business owners should see resolved before leaving any wholesale inventory in the care of personal storage space companies:

• Climate control usually doubles the monthly rent on storage spaces. Smart wholesale e-business owners will rent two spaces. First, a large and cheaper non climate controlled space for stock that does not need temperature regulation. Second, a smaller climate controlled space only for stock that requires a temperature range to remain marketable, if needed.
• Long term leases paid up front often yield a significant savings on the monthly rental fee. If it isn’t offered by the public storage company, ask.
• Access is very important depending on the turn over in wholesale stock. Be clear about the hours your wholesale stock is available, how many people you can designate to pick up and drop off, and how your personal storage space is accessed.
• Check on security. Make sure the cameras are actually recording clear video and not just decoys to deter thieves. Decoys do not help in the event a real theft. Look into local police records for any break-ins occurring on the site.
• Use your business relationship with the public storage space to pursue a deal with the company about selling abandoned property. The public storage company may be only too happy to sell you abandoned property for pennies on the dollar.

Renting Commercial Warehouse Space for Wholesale Inventory

It takes a great deal of volume in retail sales to support and justify renting commercial warehouse space for storing wholesale stock. Local classified listings will show the going rates per square foot, but each property will have different amenities. Listings usually are priced per square foot of warehouse space. The rental prices may immediately sound like great savings over the monthly cost of public storage space for a much smaller space. However, before leasing commercial warehouse space, every wholesale e-business owner should ensure the warehouse space is indeed a deal by considering these issues:

• First, business 101 states the monthly profit from retail sales of the wholesale items must exceed the warehouse rental cost and any other related storage costs. Otherwise, your warehouse option will bleed your e-Business dry.
• Rent amounts do not typically include utility costs, equipment such as forklifts to maximize space usage, nor the staff to maintain manifests of items stored which is a large job for a sole proprietor to cover.
• Putting utilities in your company’s name for a commercial space is very costly for any business. Utilities charge higher rates for business or commercial use than private homes, and most accounts require a significant deposit for utility turn on.
• Security and insurance is completely on your shoulders. This is another added cost to the monthly rent.

Warehouse space for wholesale e-businesses is not difficult to obtain, but the level of warehousing needs to be appropriate for the growth of the wholesale business into a retail entity. In strictly drop-shipping wholesale e-businesses, the issue of warehouse space is never even a concern. Once a wholesale e-business owner steps into the retail realm, he or she must be prepared to negotiate lease agreements and incorporate warehousing costs into their profit calculations. There is no reason to be discouraged by securing wholesale warehouse space, but most wholesale e-business owners should start small and may never need commercial warehouse space.