Warehousing can be a significant cost for small companies, especially when your inventory doesn't fill the space. Instead of wasting money operating a full warehouse which you don't need, many companies are turning towards the growing trend of on-demand warehousing.
On-demand warehousing isn't new, Amazon has been utilizing it for years through their 'Fulfilled by Amazon' or FBA system. Here, companies provide products to Amazon to keep in their warehouses, where Amazon will be responsible for picking, packing, and shipping orders. Here, costs are reduced as companies only pay for limited space within the Amazon warehouse, instead of owning or leasing their own warehouse space.
Today, there are many other options besides FBA to access on-demand warehousing options. These options include a low- or no-minimum volume of product, which is housed in a shared warehouse space. By combining product from multiple companies into a single warehouse, space is utilized more efficiently with less waste, which reduces the cost for each partner involved. Another major benefit is the ability to spread out your resources across your geographic range in a way that is most effective for you. Instead of aggregating all your inventory in one central location, which drives up shipping costs, companies can utilize several on-demand warehouses throughout the country which allow your shipping speeds to improve while your shipping costs are reduced.