Overseas warehouses have a promising future from a distance, but not many see smooth sailing from a close distance. From a warehouse operator’s perspective, the problem is not marketing, but cost. On the one hand, it is the cost of operating overseas warehouses, and on the other hand, it is the seller’s inventory cost. The operating cost is passed on to the seller’s warehousing and logistics costs. Under the general trend of e-commerce’s thin profits, the advantages of this channel have been seriously weakened.
The first is warehouse rent. The annual rent for overseas warehouses in the United States is 90 to 110 US dollars/square meter, the annual rent for overseas warehouses in the United Kingdom is 80 to 100 pounds per square meter, and the annual rent for overseas warehouses in Germany is 70 to 100 pounds. The annual rent for overseas warehouses in Australia is US$100 to US$130 per square meter, which is generally two or three times that of large and medium-sized domestic cities.
Necessary investment in fixed assets cannot be omitted, including pallets, shelves, forklifts, conveyor belts, PDAs and other hardware facilities and office decoration, and investment in invisible IT systems should be followed up simultaneously. The second is manpower. Labor costs in developed countries are generally high. In the United States, the minimum hourly wage for warehouse workers is US$10 to US$15, which is comparable to the level of domestic software engineers. However, in order to operate an overseas warehouse, it is not enough to have employees, space, equipment, and logistics channels. Issues such as security, taxation, detection of counterfeit goods, and exchange rate fluctuations all require careful consideration.
Take a 1,000-square-meter US warehouse as an example. The rent is 8,000 US dollars per month. It requires 5 to 6 local employees. If the warehouse manager is divided equally, the conservative salary is 2,200 to 2,500 US dollars per month. Not counting labor insurance, unemployment insurance, etc., plus various office supplies, packaging materials, water, gas, electricity, rental insurance and other miscellaneous expenses, these are about 1,000 US dollars, which means that you need to pay 22,000 to 25,000 per month. The cost is around $10,000.
Based on the income of US$1 per order, it would take 20,000 to 25,000 orders a month to ensure no loss. On average, 1,000 orders would be processed every day. If it were not for the Chinese brothers who were paid on a piece-by-piece basis, there would be no automation. Assistance can achieve half of the goal, which is already overwhelming. Coupled with the volatility of e-commerce orders, manpower allocation has always been the number one problem in overseas warehouse operations.
The third is inventory. Improper stocking or poor sales of goods are detrimental to both warehouses and sellers. However, many sellers are not professional enough in product selection and inventory analysis. A large amount of inventory results in occupied funds and invalid warehouse rent. The double cost, only generating orders is a win-win situation.
Not losing money has become the biggest test of operating an overseas warehouse. A third party is cheaper than building a warehouse yourself and hiring operators yourself. Although the warehouse can save as much as possible in order to control costs in daily operations, it is impossible to arbitrarily reduce the number of picking and packaging operators. The safety and compliance of the warehouse cannot be spared, nor can the basic service demands of sellers.
In the future, overseas warehouses may develop in two directions in terms of cost reduction measures, either by selectively selecting a type of sellers and products to improve the consistency of processes and standardized service levels in the warehouse; or, Build a large warehouse and consider increasing automated processing in the long run to increase per capita labor productivity. Don’t talk about cost without considering scale, and don’t talk about logistics without talking about cost. Only with unit quantity can you get good prices for first-leg consolidation and last-mile distribution. These are all linkage effects.