What is a Warehouse Management System (WMS)? How it Works and Features

Meeting customer expectations for shipping, delivery, and returns is important for any ecommerce business, whether you're an independent retailer or a large brand. 

As ecommerce accounted for 16.4% of total US retail sales in Q3 2025, the demand for effective warehouse solutions is on the rise.

To navigate this shift in consumer behavior, retailers can turn to a warehouse management system (WMS). A WMS helps businesses manage the processes of receiving, storage, picking, packing, and shipping. It gives teams a central place to track inventory and coordinate fulfillment across warehouse operations.

This guide explains how a WMS works, which features to look for, and how to choose one based on your business’s needs.

What is a warehouse management system?

A warehouse management system is software that supports warehouse and distribution operations. Businesses use it to handle inventory tracking, order picking, packing, shipping, and stock movement across locations.

Retailers with in-house fulfillment, multiple storage locations, or complex inventory flows use a WMS to keep warehouse operations organized.

What a WMS manages across the warehouse

• Receiving and putaway
• Replenishment and slotting
• Picking and packing
• Shipping and order fulfillment
• Returns and reverse logistics

Receiving and putaway

Receiving is where inventory records begin. If product details or storage locations are entered incorrectly at this stage, those errors can affect later warehouse tasks.

A WMS records incoming shipments, validates receipts, and assigns putaway locations. This gives warehouse teams current inventory data as products move from the dock to storage.

Replenishment and slotting

Slotting determines where inventory is stored. Replenishment keeps pick locations stocked so orders can move without delay.

A WMS uses inventory and order data to support slotting and replenishment decisions. Teams can use it to place fast-moving items in easier-to-reach locations and restock bins before they run low.

Picking and packing 

Picking and packing are core warehouse workflows. A WMS helps teams organize picks by route, order type, or product location so staff can move through the warehouse more efficiently.

Some systems also support batch picking, item scanning, and packing guidance. These features help teams verify orders, choose packaging, and reduce picking errors before shipments leave the warehouse.

Shipping and order fulfillment 

A WMS helps teams manage shipping and order fulfillment across sales channels. It can connect order data with carrier services, shipping labels, and shipment records in one system.

WMS platforms also support order verification before shipment. This helps warehouse teams confirm that the right items and quantities go to the right customer.

Returns and reverse logistics

One out of every five online purchases now ends up back at the warehouse, a significant increase from years past. That increase has made reverse logistics a core warehouse workflow. 

A WMS can help teams manage each step of the returns process, including receipt, inspection, restocking, and quarantine.

This gives businesses a consistent process for handling returned inventory and deciding whether an item returns to available stock, needs review, or should be removed from sale.

How does a WMS work?

A warehouse management system tracks inventory, storage locations, and warehouse workflows from receiving to fulfillment. It gives businesses visibility into where products are stored, how quickly they’re moving, and when stock levels need attention.

For ecommerce businesses, a WMS helps teams monitor sell-through rates, identify low-stock items, and flag inventory approaching its sell-by date. That visibility helps teams reorder faster and keep high-demand products available.

A WMS also connects core warehouse functions, including receiving, putaway, picking, packing, shipping, and reporting. When warehouse data stays current across these workflows, businesses can reduce errors and improve fulfillment speed.

Shopify can unify warehouse and sales data by connecting online orders, in-person sales, and inventory records into a single system. That shared view helps keep product and fulfillment data consistent across locations and sales channels as a business grows.

Labor management 

Labor management helps warehouse teams balance staffing needs with fulfillment demand. A WMS supports labor planning by showing how much work is expected and how teams spend their time.

Common labor management functions include:

• Shift planning: Assign workers based on expected order volume and warehouse tasks
• Performance tracking: Measure picking and packing speed to identify coaching or process issues.
• Productivity reporting: Track hours, throughput, and labor usage over time.

Warehouse managers can use this information to decide when to hire extra help for busy times (like holidays) and when to reduce staff during slower periods to control labor costs.

Inventory tracking 

Inventory tracking helps businesses avoid stockouts and excess inventory. A WMS records product movement across receiving, storage, internal transfers, and outbound shipments so stock counts stay current.

Core inventory tracking features include:

• End-to-end visibility: View stock levels across one or more locations in one place.
• Date tracking: Monitor expiration or sell-by dates and flag products that need to move first.
• Reorder alerts: Identify low-stock items so purchasing teams can replenish inventory before availability drops.

This visibility helps businesses make restocking decisions based on actual inventory movement and demand patterns instead of manual checks or outdated counts.

Reporting and forecasting

A WMS also supports reporting and forecasting. Teams can use it to track inventory turnover, monitor staff productivity, and identify which products need replenishment soon.

That reporting helps answer practical questions like: 

• Which products are close to their sell-by date? 
• Which items need consistent replenishment to stay in stock? 
• Which workflows are slowing down fulfillment?

By centralizing warehouse data, a WMS gives businesses a clearer view of warehouse or distribution center operations. That visibility supports better inventory planning and fulfillment performance.

Benefits of warehouse management systems

Warehouse management systems offer many advantages that can improve warehouse operations and overall efficiency.

Streamlined logistics

Five-day shipping no longer feels fast. The rise of Amazon means customers expect to get their orders fast. 

So, what does fast look like? In Sifted’s 2025 consumer survey, 37% of shoppers said fast delivery is what they value most—with fast being defined as same-day, next-day, or two-day delivery. 

Either way, one thing is clear: items need to turn up at your customers’ doorsteps within 24 hours to be considered the gold standard of speedy delivery. 

Want to offer two-day shipping or less? A WMS can determine shipping times with precision. Customers see accurate shipping estimates for their home address, with no awkward, “Hey, your order is running late because you’re further away than usual” emails necessary.

Plus, most providers have relationships with third-party logistics (3PL) providers. You can lean on their high order volumes to promise customers fast, free delivery anywhere.

Improve inventory accuracy 

Managing inventory is one of the trickiest things about running a retail operation. Too much stock could pass its sell-by date—too little stock and “product unavailable” messages drive potential customers away.

Inventory shrinkage happens when you have less physical stock than your accounting sheets show. According to the National Retail Federation, inventory shrinkage costs businesses about $94.5 billion per year.

WMS software uncovers exactly how much inventory is stored, in real time. You’ll scan barcodes of new inventory and each unit picked in an order. This helps prevent inventory shrinkage.

Warehouse management systems also provide advanced order analytics so you can:

• Understand which states you ship to most
• See which orders haven’t been delivered
• See inventory on hand
• Check historical stock levels at any time
• See how many days remain before a SKU is out of stock
• Handle order replenishment based on stock availability
• Manage order allocation to international warehouses or distributors 
• Understand average cart values and shipping costs
• Determine where you can save on shipping

Lower labor costs

Productivity gains make up for the WMS price tag. A WMS reduces the cost of labor for recounting inventory or repackaging products. The system frees up time for staff to complete more strategic tasks.

Plus, the warehouse operates more efficiently when order counts are accurate and orders are packed and shipped effectively. There’s less chance of returns eating into revenue. Plus, since order accuracy is higher, you’ll improve customer satisfaction. That makes a WMS system more cost-effective than labor management.

Improve order efficiency

A warehouse management system integrates with your ecommerce platform so you can keep your stock updated. There’s no more worrying about customers placing orders for out-of-stock items. Fewer errors in inventory mean faster fulfillment times and greater accuracy. 

Other WMS software use cases to improve order efficiency and accuracy include:

• Assigning pickers optimized routes
• Opening additional fulfillment centers to cut down on shipping times
• Improving packing processes

With Shopify, data from each sales channel syncs to one back-end system. This means your WMS sees accurate, real-time inventory numbers, cutting down on overselling, back orders, and the dreaded “sold out after checkout” scenario.

Types of warehouse management systems

There are many types of warehouse management systems available, each designed to meet specific operational needs and help with different parts of inventory management.

Standalone WMS

Standalone WMS tools are usually on-premise systems deployed on an organization’s network. They’re only used for warehouse management functions. 

While they’re the most affordable type of WMS, they lack many of the features of an integrated software solution. A standalone WMS can be combined with existing solutions, but it's often sold as a one-off product without broader supply chain functions.

Standard features include:

• Barcode scanning
• Cycle counting
• Slotting
• Putaway
• Expiration date tracking
• Order picking
• Packing 
• Receiving 
• Shipping 
• Cross-docking

The biggest benefit of using a standalone WMS is that you’re in complete control of inventory.

However, a standalone WMS doesn’t cover other types of supply chain operations. Other systems may include transportation management functions, such as integration with shipment tracking systems from major carriers. 

As a basic warehouse management system, it’s a good solution for small businesses or those without a large software budget. It can also be used as an inventory management system for small and medium businesses. 

Integrated ERP and SCM-based WMS

A powerful way to improve ecommerce logistics is combining your WMS with other tools like your supply chain management (SCM) software. That is a good option for businesses looking to upgrade their software for greater scale. It can help organizations gain a competitive edge and improve return on investment (ROI). 

Enterprise resource planning (ERP) software is used to manage an organization’s resources. It gives you a view of core business systems, such as human resources, sales and marketing, finance and accounting, inventory tracking, and customer relationship management (CRM).

Some ERP vendors, like SAP and Oracle, offer WMS modules built into their systems. 

It’s more expensive, but an ERP can replace all existing software and centralize logistics into one interface. If you don’t like your existing software and want to bring it into one system, you can do so with ERP software. 

This type of WMS is different from standalone because it combines warehouse management with broader business capabilities. Decide if you want to invest in a standalone WMS or if you’d benefit from an ERP system. It depends on your business’s needs, size, goals, and existing tech stack.

Cloud-based WMS

A cloud-based warehouse management system uses a subscription model and runs without on-premise servers. It gives teams access to warehouse data over the internet, which makes it easier to manage operations across locations. 

Common features include barcode scanning, picking and packing, shipping, returns, and inventory tracking.

A provider hosts the software, so updates, security patches, backups, and server maintenance are usually handled automatically. That can reduce internal IT workload and make it easier to keep systems current.

Cloud-based WMS platforms also make it easier to connect warehouse operations with other business systems. For businesses on Shopify, that can mean syncing inventory, orders, and fulfillment data across ecommerce, retail, and warehouse workflows in one place.

WMS versus other types of warehouse software

A WMS isn’t the only type of software used in a warehouse. Here’s how they all work together:

• Enterprise resource planning (ERP): Manages accounting, master data, and inventory records. 
• Order management system (OMS): Operates above the warehouse level, deciding how orders flow across multiple channels and nodes to reach the customer. 
• Warehouse management system: Dictates the movement of goods and people inside the warehouse. 
• Warehouse execution systems (WES) and warehouse control systems (WCS): In warehouses where heavy automation is used, these systems synchronize robotics and conveyors so they stay in lockstep. 

Depending on the scale and complexity of your warehouse, you can get by with just an ERP. If you’re in a low-variability environment with little automation, an ERP and a WMS can handle inventory control, stock movements, and basic replenishment. 

When a warehouse starts moving faster than human speed, it’s a different story. It needs real-time coordination between machines and people. WES and WCS earn their keep by ensuring hardware and humans never collide or wait on one another. 

Features of a good warehouse management system

A WMS has several key features, including:

• Warehouse design systems, allowing you to set up the most efficient workflows
• Integration with inventory devices like radio-frequency identification (RFID) and barcoding technologies
• Back-office integration with order entry, inventory control, and purchase order modules
• Real-time inventory tracking so you’re always up to date with stock movements
• Workforce management to help you allocate labor and monitor performance
• Support for multiple picking-and-packing methods and visibility into picking zones
• Compliance labeling and advanced shipping notices (ASNs) so you can manage the arrival of new inventory and stay compliant
• Yard and dock management to help delivery partners find the right place to load and unload

And in terms of usability, the system might also offer:

• Scaling with your enterprise resource planning system if you’re a medium or large enterprise needing everything integrated
• Advanced reporting capabilities, giving you detailed analytics on what’s happening that you can share with the rest of the business
• Mobile-friendly design, so you’re not chained to a desk when using it

Some systems are more extensive, and some are leaner. There are different options depending on your needs.

Best warehouse management software

1. Easyship
2. ShipHero
3. Veeqo
4. Blue Yonder
5. Oracle
6. Körber
7. SAP Extended Warehouse
8. Mecalux Easy

1. Easyship

Who it's for: Cross-border brands scaling up

Easyship is a shipping platform with fulfillment and 3PL support.

It offers discounted shipping rates from more than 550 global carriers, including DHL and UPS, giving customers real-time and accurate shipping rates on the checkout page.

Easyship also has a global network of warehouses and distribution centers. Store your inventory in its warehouses and view inventory stock levels through your Shopify dashboard. 

Price: Free with under 50 shipments/month.

2. ShipHero

Who it's for: Emerging, scaling, and high-volume brands

Do you have a multichannel retail strategy? If you’re selling products in popup shops, on your ecommerce site, in a permanent brick-and-mortar store, or all of the above, ShipHero can track warehouse inventory across all selling channels. 

Incoming orders are validated before being shipped from a ShipHero distribution center. You can also configure automation to save even more time and money, such as priority shipment for international orders.

ShipHero creates optimal routes throughout fulfillment—using national, regional, and local carriers—lowering your risk of delays and inefficiencies. And its new PostHero feature allows you to track packages across carriers, so you can analyze shipment performance after they’ve left the facility. 

Price: Free to install. Contact for pricing. 

3. Veeqo

Who it's for: Multichannel brands selling products across different warehouses

Veeqo is an order fulfillment platform that combines inventory across multiple platforms, including your Shopify ecommerce site and marketplaces like Amazon and Etsy.

It gives you a single source of truth to answer the question, “How much stock of this SKU do we have left?” Veeqo can also handle incoming returns and update stock levels accordingly. You’ll be able to automate tasks like warehouse stock routing, shipping rules, and order status.

Veeqo offers an extensive suite of reporting tools, making your forecasting easier and more accurate. It can help you predict supply issues, see which items are likely to run out of stock, and better understand demand during sales periods. 

Price: Shipping plan is free. Inventory starts at $19 per month, and High Volume starts at $350 per month, with pricing based on order volume.

4. Blue Yonder Warehouse Management

Who it's for: Warehouses with robots looking for resource orchestration

Blue Yonder is a warehouse management system for large retail and distribution operations, including grocery, hardlines, and high-tech businesses. It supports warehouse workflows at a national or multi-site scale.

Its core features include inventory management, shipping, and ecommerce fulfillment. Blue Yonder also includes tools for yard management, which help teams coordinate trailers, dock doors, and yard activity. Its resource orchestration tools help manage labor, schedules, and warehouse automation.

Price: Available on request. 

5. Oracle Warehouse Management 

Who it's for: Consumer goods, manufacturing, and wholesale suppliers

Oracle Warehouse Management helps businesses manage inventory across warehouses, distribution centers, and yards. It supports omnichannel fulfillment, including buy online, return in-store (BORIS), and other workflows that require inventory visibility across locations.

The system integrates with Oracle’s broader supply chain tools, making it a good fit for businesses managing complex operations across multiple sites. Oracle also supports different fulfillment environments, including warehouses, distribution centers, stores, and smaller local fulfillment setups.

Price: Available on request.

6. Körber 

Who it's for: Large brands with hybrid distribution between store and warehouse

Körber is an enterprise-focused, cloud-based WMS that’s highly customizable. Its features include receiving, putaway/flow-through, inventory management, order processing, replenishment, pick/pack, and loading and shipping.

The software helps brands with multiple warehouses increase efficiency, reduce labor costs, and streamline merchandise flow. It sits alongside the company’s vast range of warehouse management services.

Price: Available on request.

7. SAP Extended Warehouse Management

Who it's for: Brands shipping a high volume of goods each month

SAP Extended Warehouse Management is a WMS that can be deployed onsite or in the cloud. It offers direct control of warehouse automation equipment, detailed analytics, and a wide range of integrations.

It’s aimed at large-volume brands that want to optimize warehouse throughput of their warehouse while automating workflows. You’ll get the standard order management features alongside powerful tech integration to support busy operations. 

If your supply chain logistics are complicated, this could be the best tool to bring it all together in one system. 

Price: Available on request. 

8. Mecalux Easy WMS

Who it's for: Warehouse operators with specific material requirements

Mecalux Easy WMS is a flexible WMS designed for warehouses of any size. The company warehouse and storage design services, and the software can work as an extension of that setup.

This WMS could be useful if you’re interested in custom designs for your warehouse operation, especially if you have specific material requirements for moving goods around. In that case, custom software—whether cloud-based or locally deployed—could be the better fit.

Price: Available on request.

How to choose a warehouse management system

If you’re finding your warehouse isn’t as productive as you’d like, here are four steps to choosing a WMS solution: 

1. Evaluate your current system.
2. Collect team needs.
3. Find and evaluate vendors.
4. Choose your WMS vendor.

1. Evaluate your current system

Start by identifying the problems in your current warehouse workflow. A new warehouse management system won’t fix inaccurate inventory counts, slow returns, or inefficient picking on its own. It should address the operational issues your team needs to solve.

Review what’s working, what isn’t, and where errors are affecting fulfillment, labor, or inventory accuracy. Ask warehouse staff which tasks slow them down or create repeat work. That feedback can help identify gaps a WMS needs to address.

Picking is one example. If pick paths are inefficient or inventory locations are unclear, teams spend more time fulfilling each order. A WMS can improve that process by organizing inventory locations, guiding pick routes, and reducing manual checks.

Returns can reveal similar issues. If staff enter return details by hand, processing takes longer and inventory records are more likely to be wrong. A WMS can speed up returns by capturing product data through barcode or RFID scans and updating stock records during the return process.

2. Collect team needs

Once you’ve audited your system, ask each team member to create a list of functions they feel the warehouse management solution needs. This could be back-office integration with order entry and inventory control modules, or automations for compliance labeling and ASNs.

Encourage team members to prioritize their need-to-haves and nice-to-haves. This will help you rule out any WMS that doesn’t meet your team’s or business’s needs.

Get started with these questions:

• What do you need to accurately pick, pack, and ship orders?
• What current workflows could be automated?
• What does your existing ERP setup look like? 
• What information do you need to make strategic warehousing decisions?
• How fast does warehouse data need to sync across the enterprise?

3. Find and evaluate vendors 

Use your requirements list to compare warehouse management system vendors. The goal is to find a system that fits your workflows, equipment, and implementation capacity.

Implementation matters as much as features. A WMS may support the right functions on paper, but the rollout can still fail if the system is difficult to configure, train on, or connect with existing tools. Ask each vendor how their system handles setup, migration, support, and staff training.

Vendors should also support the operational areas your business relies on. That can include warehouse management, inventory control, order management, accounting workflows, and electronic data interchange (EDI) integrations.

After narrowing the list, look more closely at how each system works with your warehouse tools and equipment. That may include barcode or RFID scanners, shipping systems, communication devices, pallets, lift trucks, and forklifts. The system should also make inventory and accounting data available to the teams that need it.

Cost is another part of the evaluation. Compare the full cost of implementation and ongoing use, not just the starting price. Ask vendors for details on:

• License fees
• Implementation costs
• Configuration or customization costs
• Support and maintenance fees
• Staff training costs

Case studies can also help here. Look for examples from businesses with similar warehouse size, order volume, or industry requirements. Useful data points include:

• Time saved
• Order accuracy improvements
• Error reduction
• Cost savings
• Throughput gains

4. Choose your WMS vendor

By this point, you should have a shortlist of WMS vendors. Now comes the fun part: choosing which one you’ll use in your warehouse. 

There is no single formula here. The right WMS for you fits within your budget and has proven case studies to show how it’s solved problems for other companies. It should also integrate with the tools and technologies you already use.

The ideal WMS includes all the must-have features your team listed (and a few nice-to-haves, too). The cherry on top is a WMS vendor that has the enablement materials you need to train warehouse staff on how to use the software.

Find (or upgrade) your warehouse management system 

With the right WMS, you’ll improve order and inventory accuracy, simplify logistics, and lower manual labor costs. That can make warehouse operations easier to manage at scale. 

As your business grows, adopting a WMS that works closely with Shopify can help you handle new channels and order spikes. Whether you launch a second retail location or partner with a new marketplace, a unified commerce approach helps your WMS scales, without requiring multiple disconnected systems.