In-House Inventory: strategies for managing your warehouse at home or through suppliers

In-House inventory is the main player in many e-commerce businesses, from the small seller starting out in their home garage to established companies managing thousands of products.

Our experience gained with thousands of digital entrepreneurs has taught us that managing internal inventory is not just about physical space, but above all about adopting an operational philosophy that can determine a company’s success or failure.

Subscribe to Newsletter

Articles, mini-guides and updates on Amazon world from leading insiders.

I accept the privacy policy

Too often we see sellers underestimating the strategic importance of inventory management. And too often they treat this part of their business as a nuisance, rather than a competitive advantage. The reality is quite different. Smart internal inventory management can actually provide incredible benefits:

• total cost control
• operational flexibility
• higher margins compared to outsourced solutions.

However, as you may already suspect, it requires specific skills, proper systems, and an evolved entrepreneurial mindset.

These requirements have become more pressing over the years. If in the past it was enough to have a space to accumulate goods, today it is necessary to think in terms of:

• integrated supply chain
• advanced technologies
• operational excellence.

After all, Amazon has raised consumer expectations, making it essential for every seller to compete on speed, accuracy, and customer experience.

The choice between internal management, external logistics services, or hybrid solutions is never simple or definitive. It is rather a strategic continuum that evolves with business growth, market changes, and company goals. Let’s find out more!

> Also read our article Amazon Inventory Management: a guide to warehouse optimization <<<

Managing inventory at home

Starting with home inventory is not just an economic necessity for many entrepreneurs, but also the best way to learn every aspect of the business. The garage, attic, or guest room can become effective labs where processes are improved, which, once scaled, can generate millions in revenue.

In short, don’t look down on home inventory management. On the contrary, we believe this phase is fundamental to developing that deep understanding of product and processes that distinguishes successful entrepreneurs. When you personally receive, count, store, and ship each item, you develop a confidence with the business that no dashboard or report can replace!

Of course, home inventory management requires significant effort. Every square meter must be optimized, every process efficient, every movement purposeful. Applying lean production principles even on a small scale can help significantly.

Keep in mind that with limited space, organization becomes even more important:

• develop a logical product coding system
• implement stock rotation principles
• create dedicated zones for receiving, storing, picking, and packing.

For this reason, we always recommend purchasing industrial metal shelving, transparent organizer containers, and professional labeling systems from the very beginning.

> Also read our article European production hubs: which are best for your sourcing?   <<<

Managing inventory through suppliers

Inventory management at the supplier’s site is one of the most underestimated strategies in the e-commerce landscape, especially considering that many advanced suppliers are developing storage and order fulfillment capabilities that can be a game-changer for businesses of all sizes.

If this is the path you want to follow, it becomes crucial to make the supplier a true partner, carefully selected and “bound” through detailed contractual agreements and continuous performance monitoring systems.

Despite these efforts, the advantages of such an approach are significant:

• zero capital tied up in inventory
• drastic reduction of obsolescence risks
• ability to test new products without initial investments.

However, the trade-offs are equally important:

• less control over delivery times
• total dependence on supplier reliability
• potential priority conflicts during peak demand periods.

Keep in mind also that the pricing model for this arrangement varies significantly. Some suppliers offer free storage up to certain volumes, others charge monthly fees, while still others slightly increase unit prices to include the service. Usually hybrid models with a small monthly fee plus a minimal price adjustment represent the optimal balance for both parties.

Managing inventory through external logistics

Third-party logistics providers are probably the most scalable solution for companies that want to focus on their core business while outsourcing operations to specialists. However, choosing the right provider and managing the relationship requires specific skills that cannot be improvised.

Our view on logistics providers is that there are no universal solutions. Only solutions specific to certain business needs. A perfect provider for the fashion sector may not be so for electronics. Likewise, an excellent B2C provider may fail in B2B.

When evaluating a logistics provider, always keep in mind multiple factors such as:

• geographic location and proximity to the customer base
• technological capabilities and integration options
• industry specialization
• scalability potential
• financial stability
• cultural affinity.

Underestimating these and other aspects means focusing only on costs, only to later discover that savings on fees are outweighed by inefficiencies, mistakes, and missed opportunities.

> Also read our article FBA or FBM, how to calculate the optimal stock quantity <<<

What to choose?

From the above, it should be clear that the choice between home inventory, supplier management, or external logistics services should never be permanent or based on single factors. It is a strategic decision that must be regularly reviewed according to:

• business evolution
• changing market conditions
• actual vs. expected performance of each approach.

For startups and small businesses up to €100,000 in annual revenue, for example, home management is often the only viable option, as well as the most educational. The total control over operations, the ability to quickly iterate processes, and the deep understanding gained from direct experience are invaluable in building solid foundations. However, it’s important to recognize when this approach becomes a limiting factor for growth.

Supplier management becomes more attractive for businesses with limited capital, focus on product development, or extreme seasonal fluctuations. It is particularly effective for businesses that sell mainly through marketplaces where inventory diversification is more important than inventory depth. However, it requires reliable suppliers and a systematic approach to relationship management.

External logistics services become essential when the business reaches a level of complexity that makes internal management inefficient or impossible. This typically happens around €500,000–1,000,000 in annual revenue, but can vary greatly depending on product mix, geographic distribution, and business model. The key indicator is often when time spent on logistics operations starts taking away significant time from strategic activities.

Try our warehouse management solutions for free

If you too are considering how to best manage your warehouse and want to optimize your inventory efficiency, try our tools for free: a suite of easy-to-use instruments that will let you always keep everything under control to get the most out of your business.

👉 Try ZonWizard free for 30 days, no credit card required, and get everything you need to optimize your warehouse!