International Warehouse: Cut Costs & Ship Faster (Like Shein!)

If you are looking for a way to improve supply chain efficiency and broaden your worldwide reach, the international warehouse is a strategic solution for you. However, the key of success is not just about choosing international warehouses, but also the appropriate warehouse, which ensures delivery speed, customer satisfaction, cost, and overall operational efficiency. 

This guide contains all the information you need to take advantage of the international warehouse effectively. We’ll also take a closer look at how global fashion giant Shein leverages advanced technologies to optimize its warehousing model—and what Shopify sellers can learn from it.

What Is an International Warehouse?

An international warehouse is a strategically positioned storage depot in a foreign country, which usually stores and distributes goods across borders. It plays an important role in managing inventory, fulfilling orders, shortening shipping time, decreasing transport expenses, and empowering businesses to reach a worldwide customer base.  

Blending strategic locations and advanced technology integration, leveraging the international warehouse is the key element to achieve global success for all businesses. 

Benefits of International Warehousing

Entering the world of international e-commerce is a difficult but unquestionably profitable endeavor. Let's examine some of the main advantages of employing global warehouses:

• Improve customer satisfaction: The influence of an international warehouse on customer satisfaction improvement is to enhance the speed and efficiency of delivery. The closer the warehouse to the customer location, the shorter the time it takes to reach the customer. Also, in an unlucky case,  it can significantly boost customer happiness and increase retention rates.

• Reduce cost: Consolidating inventory in an international warehouse is an effective way to lower the expenses related to inventory management, transportation, and customs clearance. This enables rote optimization, better shipping rates, and elimination of multiple warehouses, whilst enhancing shipping time and savings on operational expenses. 

• Manage risk: By distributing your inventory across international warehouses, you can improve stock control and risk management by minimizing stockout risk in high-demand regions and overstock in low-demand areas. Moreover, it eliminates the associated effect when one warehouse faces a problem of damage or delays, ensuring the overall operation remains safe. 

• Enhance supply chain visibility: International warehouse helps to create a greater visibility into the supply chain, enabling you to track shipments and inventory levels in real-time. Once you have had a close look at the inventory and shipment, you can respond promptly to market changes and customer demand, ensuring smooth and effective operation.

• Acess to new markets: By allowing you to store and distribute products in multiple countries, international warehouses increase your brand’s awareness and presence in particular markets, creating a great opportunity to improve reputation, expand customer reach, and increase revenue. 

• A convenient approach to returns: Delivering the wrong product or the product not meeting the customer’s expectations is an inevitable thing, especially when fulfilling an extensive number of orders. In these situations, with a nearby international warehouse, the refund and exchange can be implemented quickly and cost-effectively. 

Types of international warehouses

Public warehouse

Public warehouse is the most practical international warehouse for e-commerce businesses who are at the first stage of go global journey with limited resources to establish foreign operations themselves. It is open for any business to use, follows a pallet-based billing, for which you pay a fee per pallet stored monthly or annually. 

A public warehouse is an ideal solution since the cost to rent space from a public warehouse is lower than running your own warehouse, by eliminating the cost for construction and maintenance. However, a drawback of the public warehouse is that every task is managed by a third party, not your staff, so you have less control over your inventory and shipping.

Private warehouse

Different from a public warehouse, a private warehouse is owned by a company for its exclusive use. For example, if your store is based in the US, you may build a private warehouse solely for your own use in another country to serve international buyers. 

As a private warehouse is your own assets, you can freely design the space to fit your specific requirements, giving you full control over your inventory management and product quality, and reducing the risk of damage or loss. 

Nevertheless, this international warehouse is capital-intensive. Building and maintaining a warehouse can be costly, and it takes a long time to see a positive return on investment. Therefore, if you do not have a strong and consistent cash flow, this type is not right for you. That’s why private warehouse is mostly used in big companies with large inventory volumes and solid capital. 

Bonded warehouse

A bonded warehouse is primarily used to store imported or exported goods. Unlike public warehouses and private warehouses, which are owned by businesses, a bonded warehouse is run and managed by the local government, allowing businesses to bring products in or out of the country without being responsible for tax or import duties. It also offers flexibility regarding shipments before final clearance. 

The optimum use case for a bonded warehouse is an import/export company. Because customs officers operate at borders when commodities are transported between nations, it is frequently seen near ports and airports.

Distribution center

A distribution center, also known as a DC, is a facility that handles the entire order fulfillment process, from storing, receiving, packaging, and shipping products. Goods that are stored in a distribution centre are often redistributed to the retailer or directly to the consumer. Moreover, to effectively satisfy client needs, distribution centers also provide value-added services like product mixing and cross-docking.

Fulfillment center

To adapt to the significant demand of e-commerce businesses, the fulfillment center was born to assist businesses in managing storage, picking, packing, and shipping products to the customer’s door. Under the fulfillment center umbrella is everything from straightforward warehouse-based operations to more intricate third-party logistics providers (3PL) that help you reduce administrative expenses, automate processes, and choose the strategic locations for effective shipment, which is essential for this fast-paced online shipping. 

Key Factors and Tips to Choose International Warehouses

Selecting the perfect warehouse for your international market requires careful planning and decision-making. To help you choose the right option, here are some key elements you need to keep in mind: 

Location

The ultimate goal of the international warehouse is to meet customers' expectations for rapid delivery and low-cost shipping. Therefore, the right warehouse not only has proximity to customers but also integrates with the broader distribution network. 

 Make certain that your international warehouse locations:

• are near your main market

• are politically and economically stable

• have a robust transportation infrastructure

• have beneficial trade agreements with your home country

• have labor availability

Popular locations for your consideration include:

• Asia: Hong Kong, Vietnam, Singapore, Malaysia, Indonesia, and Thailand

• Europe: Germany, Netherlands, United Kingdom, Poland, and Belgium

• Middle East: Dubai

• America: Houston, Los Angeles, Chicago

Size

The adequate enables you to store your product effectively and accommodate for potential growth in the future to ultimately save costs and optimize logistics. If you choose a facility that is too big, it will be a waste of money. However, having a warehouse that is too tiny might also be an issue. Choosing the right space for your business’s international warehouse will depend on several factors:

• Current inventory size: Get an approximate figure of how many square feet of warehouse space you need to store products and operate. Providing your number of pallets, length, width, and the stacking height, these calculators will indicate how much storage space you need for what you have.

• Expansion rate: You will need a warehouse space that can accommodate your current inventory scale and your future growing needs without placing strain on your existing model. 

• Product size and type: Product size, shape, and type can have a significant impact on optimizing warehouse space. For example, if your product is huge and cumbersome, which can not be stacked on top of each other, you will need a larger space than the product that can be stacked to ensure the effectiveness in inventory management.

Cost

The cost of warehouse service is determined by multiple factors, including the size and location of the warehouse, the services provided, the volume of shipments the warehouse receives, the kind of items held, and the length of time the facility. 

Using an international warehouse, you have to pay for various types of fees associated with operating and running a warehouse, such as rent, utilities, labor, insurance, maintenance, insurance, and taxes. It also contains the expense for storing products in the warehouse, like inventory control, order fulfillment, and other related services. Therefore, make sure to analyze all these costs to see if they fit within your budget and requirements. 

Facility

Dock space, ceiling height, storage systems, and security measures are some of the warehouse's unique characteristics and capabilities.  A well-equipped warehouse should ensure the secure and effective storage and transportation of your products.

Reliability and compliance

A trustworthy facility consistently demonstrates high order accuracy, fast fulfillment speeds, and careful handling that minimizes damage during transit. These performance indicators not only reflect operational excellence but also directly impact customer satisfaction and brand reputation. 

On top of that, it is also crucial to verify the warehouse’s compliance with both domestic and international regulations. Ensure the facility adheres to local laws, customs procedures, and international trade compliance standards. 

How Shein Uses International Warehouses

Globally recognized as a fast fashion platform, many people do not know that Shein is an ecosystem of warehouses all over the world to efficiently distribute and deliver products. No matter where customers are from, once they place an order with Shein, Shein can choose the nearest warehouse to send it out in the shortest time (normally 3-7 days). If you plan to partner with Shein for your store's international warehouse, it would be beneficial to your business, thanks to its innovative technology in operating and managing the warehouse, ensuring effectiveness in every aspect. 

Automation Technology

• Automated sorting and packaging: Shein equips a large number of robots and automation machines to be responsible for simple but precision-needed tasks like picking and packing. This automation eliminates errors caused by manual labor and enhances the efficiency of order processing. 

• Intelligent storage equipment: Shein also uses automated intelligent storage systems for transporting goods from the storage area to the sorting area before the sorting and packaging step. 

Intelligent Management Technology

• Warehouse Management System (WMS): This is an advanced management technology that helps Shein effectively carry out the warehouse automation and intelligent management mentioned above. That said, the VMS makes it easier for Shein staff to monitor the inventory in real-time and replenish the products in a timely and precise manner. 

• Intelligent Transportation Management System (TMS): Beyond providing simple logistic information for users, TMS allows Shein to manage the transportation routes and optimize the network in the background. This ensures that the product is delivered promptly and effectively to the distribution centers.

Data-driven Technology

• Dynamic Inventory Management: With a huge production volume, Shein brings technological innovations into play, taking advantage of data analytics to manage and replenish inventory flexibly according to the market changes. Consequently, it reduces the risk of inventory backlogs and stock-outs. 

• Internet of Things (IoT) Integration and RFID Technology: Shein will also use RFID technology and Internet of Things (IoT) integration to help with warehouse management, real-time monitoring of the warehouse environment and equipment condition, inventory tracking with RFID technology, and precise warehouse management checks. For businesses seeking scalable and smart warehousing solutions, facilities equipped with IoT and RFID offer a competitive edge in global supply chains.

Conclusion

By using an international warehouse, you can access great opportunities to reach new markets, scale your business, and achieve global success by delivering an excellent shopping experience for international shoppers while drastically shortening delivery times. We hope that this useful information can help you gain a deep knowledge about international warehouses and how to leverage them to fully meet your business’s requirements, optimizing cost and maximizing effectiveness.  

If you have any questions about international warehouses or e-commerce, feel free to contact GemPages for help. We are happy to accompany you on this interesting journey!

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