What is a warehouse program?
When talking about product distribution, the warehouse program is what it sounds like: you ship your product to the warehouse, and you’re done. Let’s say you’re selling to a one-thousand store chain. Can you imagine using direct store delivery to deliver to 1000 stores or working with distributors so they can deliver to those stores? That’s amazing, but that can be very difficult. What you can do is go through the warehouse program.
This means that you ship to a single location, a centralized warehouse, and from that warehouse, they ship everywhere. When I say “they,” I mean the distributor or the chain itself. Some chains have their own warehouse program system, and they will charge you for this service. By the way, it’s not free. You have to pay for it.
Warehouse programs are a system of wholesale distribution into retail. Accounts can also be to other types of accounts. It doesn’t have to be just for retail. It can be to food service and other accounts. In my Wholesale MBA course, we’re focusing on mass retail. If you’re interested in other courses, go to wholesalemba.com or contact us so you can learn about other courses we offer, either for micro learning or the long courses for yourself or your employees.
The negative side of warehousing
A negative of warehouse programs is you have to pay for the distribution. You also have to pay for anything that goes wrong along the way. I mean that if there’s spoilage, you have to pay for it. If they drop products, you have to pay for it. You might have product returns, and they will discount those returns from your invoice. And you don’t have a say in this. So, that’s the negative. The negative is it’s not a dream, it’s not “ship it and forget it,” and now they own the product. It’s not that simple. Distributors can always return the product to you, and you have some expenses that they will charge you for.
The other thing is if you don’t have a marketing plan, don’t try warehouse programs, especially to one thousand stores. In other words, if you’re not sure that the product will sell off the shelf without marketing, don’t use the warehouse program. You must have a marketing to consumer fool proof system to ensure your product will sell. You can use television, radio, other types of advertising, merchandising, and in-store promotion with your own promotional or strike teams. Don’t use the warehouse program if you think your product will not sell just by sitting on the shelf.
Now there’s another negative. Your product might never make it to the store shelf. Remember, you don’t have control over this product because you are just shipping your product to a warehouse. Someone else is responsible of moving and presenting your product. What is there for them? What incentive do they have to do this? You don’t even know if it will make it out of the warehouse and into the shelves.
“Your product might never make it to the shelf.”
I used the warehouse program when I owned a distribution company and produced over 1000 consumer packaged goods for chains. But I called the stores to make sure someone checked the inventory and ensured my products were on the shelves. Forty percent of the stores always had the product in the back. They never had it on the retail floor, and many times they returned the product to me, claiming my product wasn’t selling. When I learned this, I started calling the warehouse managers incentivizing them to get my product out of the warehouse and put it on the retail floor.
The positive side of warehousing
As you can imagine, the positive is your ship to one location and you’re done. You don’t need to deal with distributors, you don’t need to deal with wholesalers, and you don’t need to own your own trucks, definitely you can do this without even having the product in your warehouse.
“You don’t need to deal with wholesalers.”
Use a third-party logistics company where you store everything and then you ship using their services to the central warehouse and you’re done. Then you collect the money, you make sure that you do the marketing correctly so that the product sells. That’s called a warehouse program. The difference between a warehouse program and direct store delivery is with direct store delivery, you’ll need distributors, and distributors are usually localized distributors. There are not a whole lot of national distributors in this way.
“You can be national on the spot without a lot of money.”
Warehouse programs are a system of wholesale distribution into retail, and with the rise in e-commerce and the consumers’ demand for front-door deliveries, getting inventory to the right locations and creating efficiencies around how that inventory is stored and moved is critical. The right warehouse program has the potential to help.
Exploring the benefits of a warehouse program is imperative for businesses experiencing growth.
1) Optimized Space and Lower Operating Expenses
Warehouse management systems optimize warehouse flow by analyzing the best use of floor space based on the task and material characteristics.
2) Inventory Visibility
Using a warehouse management system will also provide visibility of accurate, real-time inventory levels.
3) Optimized Supply Chain
A warehouse management system optimizes a warehouse’s internal operation, extending to the broader supply chain.
4) Reduces Operating Costs
A warehouse management system can also help a business reduce its bottom line.
“If you want to know more about warehouse programs, send me a message or reach me at jorgeolson.com”