E-commerce Warehouse Layouts: 10 Steps to Efficiency

Key takeaways

1. An optimal layout can enhance customer service, cut operating costs, and increase revenue for e-commerce warehouses.
2. The key principles of optimal warehouse layouts are workflow optimization, space optimization, and scalable/adaptable design.
3. E-commerce warehouses can experience short-term spike in demand, as well as rapid growth. Floor layout should be adaptable to short-term peaks, shifting seasonal patterns, and future growth.
4. Efficient storage is most commonly the area with the biggest potential for space optimization. Automated storage solutions significantly increase storage capacity compared to traditional shelving, storing more SKUs in a floorspace of the same size.
5. An optimal layout should allow you enough space to efficiently process returns without slowing down or interrupting order fulfillment

‍

What is e-commerce warehousing

Before we dive in, let's just clarify what we mean by e-commerce warehousing to give a better understanding of the importance of warehouse layout. After all, all warehouses aim for efficiency, right? E-commerce warehousing involves the storage, management, and distribution of goods specifically for online retail businesses. Unlike many other types of warehousing that can often handle bulk shipments and long-term storage, e-commerce warehousing focuses on handling high volumes of individual customer orders with a low average number of order lines per order, with rapid fulfillment to enable fast delivery times. They also usually have a strong emphasis on maintaining real-time inventory accuracy and availability to better serve customers across multiple order channels. And while other types of warehouses often have to perform high speed fulfillment, e-commerce has several operational characteristics not typically found in combination together in warehouse operations for other industries, which we'll explore in more detail later in the article and how they impact optimal warehouse layout.

‍

Why is warehouse layout planning so important for e-commerce warehouses?

Warehouse layout planning involves the design of storage areas, workstations, and pathways within a warehouse. An optimal warehouse layout ensures a highly efficient flow through the warehouse and between critical processes such as order fulfillment, returns, put-away, staging, and so on. It should also allow you to maintain required throughput rates and accuracy as you hit peak demand.

An optimized layout enhances operational efficiency and speed, while also utilizing floor space more effectively. These improvements offer substantial business advantages, as they can enable better customer service and faster delivery, while also saving money and increasing revenue. Some examples of how optimizing warehouse layout can benefit e-commerce warehouses might be:

• Speeding up returns processing efficiency so that SKUs enter back into inventory rotation quicker
• Maximizing space utilization to improve storage capacity, offering better stock depth, availability, and choice for buyers.

Read more: Guide to E-Commerce Order Fulfillment 2024→

‍

The key principles for efficient warehouse layouts  

While each operation has its own unique needs and processes, there are some general principles that can be used for planning e-commerce warehouse layouts successfully.

1. Workflow optimization

A well organized warehouse reduces unnecessary movement and handling, especially manual labor. It minimizes the time and effort required to move products through the warehouse and different processes such as picking and packing.

2. Space optimization

Warehouse footprint is expensive, so making the most of every inch is vital to overall efficiency. An optimal layout should strike a balance. It eliminates unnecessary movement and handling, while providing enough storage capacity for efficient operations day to day, and during peak periods. Storage is usually the area with the most potential for improving overall space utilization within a warehouse layout.  

3. Scalable & adaptable

E-commerce operators can see laarge variations between daily demand and peak. They can also experience very rapid growth, meaning operational needs change quickly. An efficient layout should be adaptable to changing needs, so that it is ‘future-proofed’ in terms of easily integrating new processes or technology. Whether it’s more order lines, more SKUs, or new equipment, there should be enough flexibility to incorporate changes without reconfiguring your layout.  

‍

How does e-commerce fulfillment impact warehouse layout and design?

The demands and complexities of e-commerce and retail fulfillment need to be considered when trying to optimize warehouse layout. Alongside the number of SKUs and types of products you handle, these factors will strongly influence what an optimal layout will look like for your operation.  

High volume of orders, low number of order lines

E-commerce warehouses process high volumes of typically smaller orders consisting of only one or two lines. So even if the number of total order lines might be comparable to another type of warehouse of a similar size, they’re usually broken down into many more separate orders that need fast, accurate fulfillment to meet customer expectations. This requires a storage layout that provides fast, easy access to all SKUs, and enables efficient high-speed picking, packing, and shipping.

Rapid fulfillment expectations

E-commerce customers expect fast delivery, with one or two days becoming an industry norm, so an e-commerce warehouse layout must aim to maximize picking speed and accuracy. However, e-commerce warehouses also need to contend with fast-changing demand patterns and dynamic SKU profiles; factors like regular seasonal rotation or short-term promotions will impact optimal SKU placement in short periods. An automated storage solution can help here, but ideally, it should allow for fast-changing SKU placement without requiring frequent planning or disrupting daily operations.  

The impact of diverse product categories & SKU ranges on storage needs  

In a competitive market, e-commerce warehouses often store a wide variety of products, with increased stock depth to meet customer expectations of convenience and choice. They can also regularly diversify, adding new product categories on a regular basis. With so many categories, there might be very different storage requirements, introducing more complexity to picking workflows. This diversity necessitates flexible storage solutions and careful organization to maintain efficient inventory management and throughput.  

The importance of returns

The rate of returns in e-commerce is typically higher than in other industries, with some estimates as many as 1 in 3 orders being sent back. So efficient returns management is essential to handle the influx of returned items, inspect them, and restock inventory quickly. Consumers increasingly look for fast, simple returns processes when choosing where to order from, so a layout that allows for fast returns processing without interrupting fulfillment is vital for maximum efficiency.

Rapid growth and dynamic order profiles require flexibility and low-friction scaling  

Online retailers can often experience rapid growth, which can also be combined with rapidly cycling peaks, such as seasonal spikes or sales. The layout must be adaptable to scale and meet these changes without significant disruptions to daily operations. This means aiming for modular layouts and solutions that can be easily reconfigured or expanded without complex planning.

Technology integration can be more complex

E-commerce warehouses and distribution centers typically process orders from multiple channels, such as an online store, third-party marketplaces, B2B store fulfillment, and more. This makes accurate inventory management more complex. The warehouse layout must support the integration of technologies such as warehouse management systems (WMS), automated picking systems, conveyor belts, and real-time tracking tools to enhance efficiency and accuracy. Using technology and solutions that can integrate omnichannel storage and fulfillment into singular workflows can help optimize layout by reducing the need for separate areas and processes for each channel.

{{cta1}}

10 steps for optimizing e-commerce warehouse layouts

Planning an e-commerce warehouse involves careful planning and consideration to ensure maximum efficiency and optimal performance. But follow these steps to guide your planning for more effective warehouse layouts.

1. Assess space requirements

Begin by determining the amount of space needed based on your inventory size and order volume. Consider the types of products you store, their sizes, and storage requirements. Ensure that the warehouse can accommodate future growth by allowing for potential expansion or reconfiguration.

2. Analyze traffic flow

The movement of goods, staff, and equipment should be carefully considered to minimize traffic congestion or bottlenecks as goods move through the warehouse. Look to combine B2C and B2B workflows and processes to reduce the number of traffic flows through your warehouse. Having a single storage setup for all your order channels can help facilitate more streamlined movement through your warehouse.  

3. Implement zoning

Divide the warehouse into zones for different activities, such as receiving, storage, packing, and shipping. Ensure a logical flow between zones to reduce handling time and improve efficiency. Clearly define each zone and train staff to follow the established workflow.

Read more: Zone Picking from A-Z →

4. Incorporate technology and wide-scale automation

Implement Warehouse Management Systems (WMS) and automated picking systems to enhance efficiency and accuracy. Use barcode scanning and RFID technology for accurate inventory tracking and faster order processing. Automate repetitive tasks, such as sorting and labeling, to reduce labor costs and improve speed.

5. Optimize SKU distribution

The location of SKUs and related product categories should be optimized for the most efficient picking. At the most basic level, this means placing the fastest-moving SKUs and categories nearest to your picking stations, and slower-moving product categories further away.

6. Optimize your storage to improve capacity and efficiency

Automated storage and retrieval systems (AS/RS) can greatly improve space utilization. They do this by reducing or eliminating aisle space, which significantly increases storage density. A much higher number of SKUs can therefore be stored in the same storage footprint, as what would have previously been just “empty” air around and in-between traditional shelving is now utilized for storage. Some AS/RS, like AutoStore Cube Storage, have custom layouts making them suitable for deploying alongside other storage solutions.

7. Design efficient flows & processes through your warehouse 

When workers move around the warehouse, locating items or moving them to another area, time is lost, which could be spent on more high-value tasks. A bottleneck in any one process will cause overall productivity to drop. Ideally, an optimal layout should, firstly, eliminate unnecessary movement, and secondly, allow for efficient operations for both everyday and peak demand.

Alongside strategic placement of different areas, aim to minimize retrieval times, especially for fast moving items. But with the fast-changing demand cycles typical in e-commerce, access to your complete SKU range should be fast and simple. Automation can help minimize manual goods handling and massively speed up retrieval times as items move around your warehouse.

8. Streamline returns processing

Develop efficient workflows for handling returned items, inspecting them, and updating inventory records. You can create a dedicated area for processing returns to avoid disrupting regular operations. To further optimize the returns process, automation can be introduced to save further space as a dedicated returns area is not necessary with many workstations able to handle multiple processes.

9. Ensure safety and compliance

Implement safety protocols and provide regular training to warehouse staff. Ensure the layout complies with industry standards and regulations to maintain a safe working environment and avoid potential legal issues. Regularly review and update safety measures to address any new risks or changes in regulations.

10. Analyze and adjust regularly

Continuously monitor your warehouse layout's effectiveness and adjust based on operational data and feedback. Regular reviews help identify areas for improvement and ensure the warehouse remains efficient as business needs evolve. Use performance metrics, such as order accuracy, pick times, and inventory turnover, to evaluate the layout’s efficiency.

How automated order fulfillment can help optimize warehouse layouts.  

AS/RS solutions such as AutoStore Cube Storage are advanced solutions designed to optimize warehouse operations with automated order fulfillment. Fast, accurate order fulfillment is at the heart of an efficient warehouse layout. Integrating this type of automation can significantly boost overall efficiency  

Maximize space utilization, turbocharge efficiency, speed, and accuracy with automated order fulfillment. AutoStore Cube Storage helps optimize e-commerce warehouse layouts, achieving high throughput performance, even in limited floor space.  

→ Optimize storage footprint with ultra-dense storage: The cube-based grid design of AutoStore maximizes storage density. Storage Bins are stacked in columns to optimize space utilization. More products are stored in a smaller footprint, freeing up warehouse space.  

→ High-speed picking for diverse SKUs and product types: Robots retrieve Storage Bins from the Grid and present them to workers at stationary workstations known as Ports. This removes the manual labor of retrieving items from storage and cuts pick times down significantly, meaning you can fulfill more orders with fewer workers.

→Speed and precision: The system provides a singular, very high consistent picking workflow for all your different SKUs and significantly reduces pick errors. Picking accuracy and quality are maintained as demand and throughput increase.

→Customizable layout & modular design: The layout is customized for each warehouse and can be built around corners, pillars, etc. to maximize your floor space. The modular design means each system can be expanded or reconfigured based on your specific needs and without any operational disruption. Can easily be combined with alternative technologies such as pick towers, garments-on-hangers, pouch sorts, etc.  

→Omnichannel inventory management: Combine B2C and B2B SKUs in a single storage solution for more space efficiency and fewer workflows.

→Open APIs for easy, powerful third-party integrations: AutoStore can be easily integrated with other technology, like pouch sorters or pick-to-light systems, to increase the efficiency of an existing space even more. It can easily be integrated with your key platforms, such as e-commerce and WMS to improve the real-time accuracy of inventory management and speed up fulfillment across multiple order channels.  

Summary

Creating an efficient e-commerce warehouse layout is essential for optimizing warehousing operations and enhancing customer satisfaction. By following the steps outlined in this guide, you can design an e-commerce warehouse layout that supports smooth workflows, maximizes space utilization, and adapts to future growth. Continuous improvement and regular adjustments are key to maintaining an efficient warehouse that meets the high standards of e-commerce customer service. Implement these strategies to ensure your warehousing operations are optimized for success.