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What is a Virtual Warehouse in Inventory Management?

Time to read: 5 minutes

Today’s customers expect an omnichannel eCommerce environment with a seamless, customized shopping experience. They want to order from anywhere, anytime. These empowered shoppers have changed fulfillment and transportation in retail supply chains.

Customers might think all your products are conveniently located in just one warehouse near your business office.

However, many successful online merchants operate differently. The top eCommerce retailers can process and distribute customer orders far more quickly than they could in the past with a “single warehouse” thanks to a virtual warehouse.

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The capacity to view an integrated view of your inventory across channels and locations is referred to as a virtual warehouse. It may also be called multi-location inventory control. Virtual warehouses depend on specialized software that compiles data on stock and inventory from across your enterprise. The physical spaces where items are housed are equally important.

Any business, big or small, that has outgrown manual inventory management using spreadsheets can employ virtual warehouses. Your company might need to reevaluate delivery practices due to increased client demand. Alternatively, you might prefer to do so to respond to consumer requests more quickly. If you manage several brands and subsidiaries, combining warehouse operations necessitates real-time data transfer across your divisions and locations.

A company’s entire product line, including all incoming raw materials and components, stored inventory, and finished goods ready for sale, is listed in its virtual stock. Virtual inventory management is frequently maintained as a virtual warehouse software system component. Digital tools enable businesses to optimize order fulfillment by positioning the product and the warehouse nearest to the customer. Additionally, it aids in monitoring inventory turnover, a crucial indicator of how frequently a product is sold over time. Systems for virtual inventory can help prevent the build-up of dead stock or unsold merchandise.

Public corporations must keep track of their inventories to adhere to local authorities. Specific paperwork is also required to prove businesses are adhering to these regulations. This tracking is easier and much simpler than manual checking, thanks to a virtual warehouse.

Why You Should Consider Setting Up a Virtual Warehouse

Fast shipping has made virtual warehouses all but necessary to remain competitive, especially for e-commerce companies.

A virtual warehouse covers real-time worldwide visibility for logistics assets, including inventories and transportation. Simply put, the software provides a clear view of your inventory and assets for logistics and fulfillment needs. 

This system allows you to distribute and store your merchandise as needed, wherever in the world. Real-time access to all your goods will enable you to meet increasing customer demand in a fast-paced eCommerce industry.

The exciting part about using virtual warehouses is that it works for various businesses. Whether your company sells the latest fashion or tech and gaming accessories, many online merchants can use a virtual warehouse.

Despite their evident differences, virtual and physical warehouses are nonetheless closely related. As you know, a physical warehouse is usually a building where products can be housed until they are sent to clients. This is also where warehouse staff collect, arrange, and store incoming merchandise. It’s common for any retail company to have multiple physical locations to keep their inventory. 

However, virtual warehousing collects and tracks the data when goods are delivered, stored, picked, sent from, or returned to a physical warehouse. It enables a company to manage many warehouses and other inventory-holding facilities. An excellent example of this would be retail store stockrooms. 

Different stores across multiple locations can be managed as a single sizable distribution and fulfillment center. This offers a real-time, comprehensive view of all manufacturing and customer fulfillment inventory.

A virtual warehouse can assist online stores in promptly and affordably fulfilling customer orders. It’s made possible by determining which product fulfillment options are the fastest or least expensive for a specific consumer. It also lessens the likelihood of sending clients late or inaccurate deliveries. 

Today’s consumers expect fast, quick shipping. Thus, a virtual warehouse is necessary to have a clear competitive advantage in the eCommerce space.

Online businesses need excellent inventory management and order fulfillment in an omnichannel sales and eCommerce environment. You’ll need speed, efficiency, and reliability to meet customers’ ever-growing expectations better. Virtual warehouses are crucial for completing consumer orders more quickly and accurately. 

Your company’s performance depends on effective manufacturing procedures, product management, and order fulfillment.  But keeping track of these elements may not always be straightforward. Companies may increase accurate, on-time delivery to their consumers without increasing their total cost of operations or ownership (TCO) with virtual warehouses. The right warehouse management system (WMS) can help you manage all your goods.

The Distinct Advantages of the Virtual Warehouse

Virtual warehouses track inventory data and product movements in real time, which lowers costs and improves flexibility overall. Depending on your company’s business goals, the specific advantages of virtual warehouses can vary. You can expect expedited customer order fulfillment, reduced inventory risk, and streamlined omnichannel sales.

When properly configured, a virtual warehouse can reserve, store, and distribute merchandise for many channels. This function alone makes it a helpful tool to boost productivity across your supply chain network. Using company data to establish cheaper ways to satisfy client expectations can improve efficiency. It also raises profit margins. 

Back-office tasks can be easily automated when used in conjunction with an enterprise resource planning tool. As a result, online merchants can use integrated systems, such as warehousing and electronic data interchange, for various tasks. 

Expedited Fulfillment

Virtual warehouses enable a business to avoid transit delays by determining which physical fulfillment facility is nearest to the consumer. This way, shipping costs can be kept to a minimum while being able to deliver within 1-2 days.

Varied Product Offerings

Virtual warehouses enable organizations to expand their product offerings without buying or leasing more warehouse space. This can be achieved by gathering data from their entire supply chain. Experimenting with new items is made easier when you have access to a network of warehouses. 

Faster Turnaround of Dead Stock

A business can maintain real-time inventory control with inventory software. Monitoring item expiration dates helps prevent the build-up of dead stock in your warehouse. You can set notifications to alert you that an item is about to expire. This knowledge can then be used to plan and execute special promotions and sales to unload potential dead stock.

Avoid Inventory Risk

Virtual warehouses decrease inventory risk by minimizing the amount of actual inventory and stock a company must maintain. Many businesses need help finding enough physical space, so they cannot afford to keep merchandise that doesn’t sell well. A bigger company can carry less inventory by using a virtual warehouse. It allows them to readily see and fulfill requests from many locations rather than stocking every item in every warehouse.

Omnichannel Capability

A virtual warehouse can make omnichannel retailing easier for a business. For instance, it might enable a retailer to provide goods outside its storefronts. This software can communicate with and update the inventory management system. It will then share that data with customer relationship management (CRM) and order management systems which can allow opportunities for procedures like buying online, pickup in-store, buying online, and returning in-store. By streamlining communication, distribution, and customer care, such an omnichannel system makes it easy for customers to purchase products from the company through several sales channels.

Optimized Inventory Management

An online business can optimize order fulfillment by managing inventory virtually. To deliver items on time, your business should facilitate inventory building in numerous locations.

For instance, a virtual inventory management procedure helps streamline the flow of goods into and out of warehouses. Even before it physically reaches the warehouse, inventory that is on its way to the warehouse from the supplier can be assigned to open orders thanks to the inventory management system. An employee registers the products with inbound stock and inventory by scanning a barcode. Then they can compare it to a purchase or inbound transfer order. An employee can choose the facility nearest the customer for an outgoing order. It can be shipped there or to a different office, along with any required paperwork.

Virtual warehouses benefit businesses looking to optimize their manufacturing, distribution, and fulfillment processes. They are essentially multi-location inventory management systems. They may make it possible for companies to service customers through various sales channels. Additionally, they enable businesses to store and access inventory anywhere in the world. Access to a more significant network of warehouses enables them to fulfill orders more quickly and affordably while improving customer satisfaction.

Get access to your very own virtual warehouse with Zhenhub. Our global network of eCommerce fulfillment centers gets your products to where they need to go, no matter the online selling platform. Access our digital logistics dashboard when you sign up now.

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