How do you better manage your warehouse through peaks and troughs? Charlie Pool, CEO of on-demand marketplace Stowga, which helps in buying and selling warehouse and logistics services, explains in this interview with eDelivery.net.
ED: Can you let us know a bit about who Stowga are?
CP: Stowga is an on-demand marketplace for buying and selling warehousing and logistics services. We are working with some of the world’s most progressive companies to radically alter the economics of their supply chains through clever trading of capacity that allows them to dynamically scale their logistics needs in line with their business needs.
ED: What was the need in the market for on-demand warehousing?
CP: Ecommerce has seen a huge boom in recent years with retailers looking to expand their product ranges and fulfilment capabilities tenfold. However, this demand comes with a need for warehouse space that just cannot be met with the same timescales.
In addition to this you have well-established retailers that have warehouses big enough to meet seasonal demand or unpredicted spikes, but are under-utilising the space around these times.
It was this disconnect that made the need for on-demand warehousing so apparent. The ability to optimise the underutilised space and offer a flexible, short-term fix for those retailers needing the extra space is where a solution like this can fix a whole host of logistical problems.
ED: What are the benefits retailers will experience from using a marketplace of this nature?
CP: On-demand warehousing is all about adaptability and the ability to scale logistics up or down in line with business needs. Retailers needing extra space can rent warehouse space on a short-term contract, for an affordable price, in a location of their choice and there is no other logistics solution that can currently offer this flexibility.
And for those looking to better utilise the space they have in their own warehouses, the marketplace allows them to rent out what they don’t use but also retain that space when they do really need it. Whether that be based on seasons, peak, a boom in sales or simply a change of regional focus, the options are there.
It is all about changing what has always been a fixed cost into a variable cost that offers flexibility in all areas of the supply chain.
ED: How do you think the rise in pure play retailing, and marketplaces like Etsy and Notonthehighstreet.com, have had an impact on the need for warehousing space?
CP: Pure play retailers are only going to add to the need for more warehouse space, simply because when you buy something online – as opposed to in a shop – that product will be shipped from a warehouse. That means warehouses are becoming ever more central to the retail stack. Ecommerce shows no signs of slowing and the consumer shows no signs of easing off on demand, but for retailers it is all about meeting that demand in the best way they can to meet customer expectations whilst still being profitable.
ED: Do you see this need increasing further as retail continues to boom?
CP: Absolutely. There is quite a shocking stat that says every $1bn spent online requires an additional 750,000 sqft of warehouse space, but where is this space coming from?
Warehouses take an average of three years to build from plan to completion and some of the retailers that will need that space may not have even launched yet. So yes the need for marketplaces that allow this level of flexibility will only increase as the ecommerce market continues to grow and retailers look to store inventory they hadn’t originally planned for.
Equally, this model allows for retailers to scale back if the market was to take a tumble or sales didn’t quite go to plan, only to scale back up when the time is right.
ED: How can on-demand warehousing help retailers address this?
CP: With on-demand warehousing there is no longer the worry of a long, expensive commitment. The model allows retailers to facilitate growth, whether that be in product base or location, without the risk that is associated with long-term warehouse leases.
Realistically even the biggest, most established retailers cannot predict how sales will pan out as accurately as they may like and consumers are of course, completely unpredictable. There is therefore no reason why the back end logistics framework can’t be as flexible as the front end customer facing parts of the business in order to accommodate this.
ED: What does competition in this market look like and why is this model of on-demand warehousing different?
CP: The real competition for this solution is the status quo. The supply chain is rigid by design and is often prone to the adage mentality of ‘if it’s not broken why fix it?’ and although there has been a huge shift in retail from a front-end perspective, the back end has changed very little. Logistics has a reputation of being very slow moving, asset heavy and less innovative, but this doesn’t need to be the case. The progressive retailers that realise the benefits of getting more flexible with their supply chains are the ones that can stand up and take on the likes of Amazon in an ever competitive market.
ED: What do you think the future looks like for on-demand warehousing, flexible logistics and retailing as a whole?
CP: Retailing as a whole shows no signs of slowing, which means the demand for warehouse space won’t either. Therefore the on-demand offering will come as a no-brainer for many retailers looking for a solution to the challenges they face in their supply chain. Logistics has never been something that any organisation would have defined as flexible, in actual fact the reality is that it is rife with inflexibilities, but the retailers who are using the on-demand marketplace seem to be revelling in the freedom and scalability that it provides, along with improved margins and the ability to be more competitive on price.
So, in summary I think retailing, particularly ecommerce will continue to boom, warehouse space will continue to be a necessity and the retailers that can efficiently scale that need up and down with their own economics will be the ones that thrive well into the future.
Charlie Pool is CEO of Stowga
Image credits: Stowga and Fotolia