eCommerce – The warehouse space challenge

LogistCompare will be exhibiting at eCommerce Show North this year.

As the e-commerce business continues to increase, retailers need more storage space to grow.

With the current demand volatility, faster delivery time and shortage of warehouse space available, being closer to the customer is becoming essential. New smaller satellite facilities have been created to facilitate the drive for convenience: faster delivery times is now an integral part of the last mile process.

Whether small sheds or larger hubs, location is of paramount importance. A major factor in identifying suitable warehouse locations is the quality of access to and from the site. Depending on the retailer requirements, warehouses need to be located in the right spot to be able to not only supply the customer but also receive goods from suppliers.    

For the traditional “brick and mortar” retailers, the implementation of such development, brings a lot of pressure across the supply chain which was originally designed to replenish only a few stores on a regular basis. Accessing volatile space to supply customer demands becomes a real challenge.

We estimate that the UK has over 400m sq. ft. of warehouse space. It then comes as no surprise that the retail sector occupies 85m sq. ft. of this space for high street and homewares retailers and 62m sq. ft. food retailers. It is also important to mention that the online retail sector currently accounts for 8.5m sq. ft. of space and still continues to grow.

The availability of big hubs has fallen by 75% since 2010, with only 2.6m sq. ft. of space available across UK, while there is just 17m sq. ft. space currently under construction.

The world of warehousing is becoming quite unrecognisable. A vast underground warehouse near Heathrow has received planning permission. Amazon has announced plans to use a 580-acre lake as a submerged warehouse for goods.

As retailers increasingly move their business online, warehouse flexibility becomes an essential component in meeting their customers’ requirements. Whether it’s a large or small shed, the warehouse needs to cope with the volatility of the customer demand. Seasonal demand is not limited to online retailers. This inevitably brings serious pressure on warehouse capacity, potentially damaging both the possibility to maximise sales returns during peak times and retailer reputation.

Disruptive technology has given the opportunity to provide customers with easy solutions to better their shopping experience. Visibility allows them to locate their products, buy what and when they want and access their products easily and conveniently.

Online business also brings a high level of flexibility when dealing with returns. Online customers value a faster return process. This can be facilitated by either the use of a local store or fast return to warehouses. This puts a lot of pressure on hubs to maintain availability of both large vehicles and smaller vans or even motorbikes and scooters.

Finding the right warehouse space to accommodate the current e-commerce client is becoming a challenge especially when lack of space availability is the biggest culprit. Technology is now allowing portals to support customers with this process.

The latest and most advanced portals able to support the “Race for Space” is LogistCompare. This online portal that brings together customers looking for storage space and warehouse providers. The portal is interactive and therefore able to offer a direct communication between providers and customers.

The platform provides a selection of warehouse options and costs, allows customers to request customised quotations and provides live visibility of available space in the warehouse.  It’s currently free to use for retailers.

For a long time, retailers have rightly focused their efforts merely in selling their products to clients. With the change in the shopping behaviour, retailers need to turn their attention to these crucial areas: cost, location, flexibility and immediacy. All these can be addressed by the right warehouse solution.