Warehousing – definition and meaning

Warehousing has two meanings:

1. All the physical and administrative functions related to storing products and materials, i.e. everything to do with keeping things in a warehouse. A warehouse is a building where goods and materials are stored.

2. A procedure in which a business gradually accumulates a holding of shares in another company that it plans to acquire one day. In this illegal securities trading practice, the perpetrator purchases more shares in a company than stock exchange regulations permit.

This is done by disguising the purchases under a number of nominee names – buying in the names of other entities.


Warehousing - features, functions and benefits

Warehousing is an important part of a company; it helps the business achieve maximum-possible revenue.


According to Collings English Dictionary, warehousing is:

“The act or process of storing large quantities of goods so that they can be sold or used at a later date.”

“An attempt to maintain the price of a company’s shares or to gain a significant stake in a company without revealing the true identity of the purchaser. Shares are purchased through an insurance company, a unit trust, or nominees.”

Storage-related warehousing

In this sense, the word relates to the storing of goods and materials that will be distributed or sold later. Functions include inspection, identification, receipt, verification, shelving (putting away), retrieval for delivery, etc.

The warehouse may be very small, perhaps a spare room, garage or basement, or a large building that has been purpose-built for storing things.

In warehousing, there are specific elements that help retailers, distributors, manufacturers, government agencies, and other entities monitor inventory and store it securely. These elements include:

Shelving and Rack systems that offer easy and quick product or material access and maximum storage capacity.

Climate Control systems so that goods and materials can be stored properly and for as long as possible. Certain pharmaceutical drugs and food products must not be exposed to heat. Other materials or goods need to be preserved in a low-humidity environment.

Software specifically related to inventory control. It tells you exactly where your products or materials are.

Storage and Moving equipment, such as forklift trucks, cranes, bins, conveyor belts, pallet jacks,etc. This equipment needs to be acquired, maintained, and used/operated.

Shipping Supplies for the fulfillment of orders.

Warehousing Personnel including machine, forklift or crane operators, stackers and shelvers, clerks, etc.

As warehouses become more automated, there is a growing need for IT (information technology) personnel, including roboticists and artificial intelligence engineers.

Security to protect the goods and materials from theft, fire, floods, vermin, and other hazards.

Access to Transportation so that goods and materials may reach their destinations as rapidly as possible. Most warehouses are located near major highways, seaports, airports, and/or railway services.

According to Shopify Inc.:

“Warehousing and all that goes along with it is part of a sophisticated industry known as logistics management. Logistics includes procurement, inventory management, and distribution.”

“It falls under the supply chain umbrella, which also includes product development, marketing, sales, and other product-related disciplines.”

Warehousing - SecuritiesWarehousing involves purchasing shares of your target company little by little, and then one day – when you have a sizable percentage of its stocks – to make a bid to become a majority shareholder.

Warehousing – accumulating shares

Warehousing may refer to the process of purchasing and building up shares in a company that you aim to eventually acquire.

Imagine that fictitious company Fred Blogs Inc. is thinking about taking over a controlling interest in Jane Doe Corp. next year. It decides it will not make a big tender offer for Jane Doe’s shares now, but rather will start purchasing a few thousand shares intermittently over the next 12 months.

If Fred Blogs is purchasing a few thousand shares now and again in the same company over a period of 12 months, it is warehousing those shares.

By purchasing shares over a 12-month period, Fred Blogs can take advantage of moments when Jane Doe’s shares are cheap. Warehousing also prevents spikes in share prices that occur after big blocks of stocks are purchased in one go.

Fred Blogs can move forward in its plan to acquire Jane Doe secretly – under the radar – especially if it does this through a number of nominee names, i.e. buys the shares using other entity’s names

If you purchase more than 5% of a company’s shares in the US, the SEC (Securities and Exchange Commission) requires that you file a form 13G or 13D. If you do not file the form, you are breaking the law. If you do not file the form and your purchases through nominee names are discovered, you are in serious trouble!