How marketplace technology is changing how we shop for warehouse space

LogistCompare will be exhibiting at eCommerce Show North this year.

The booming of e-commerce has dramatically increased the demand for warehouse space. 

Ecommerce, by its own nature, needs three times more space than brick-and-mortar retailing. More space is required for inventory, automation and labour. In the UK only, we spend over £7 billion per year in returns; 60% of the goods shopped on line are sent back versus only 6% of the goods bought in store. 

Approximately 235 million sq.ft. of warehouse space were bought or leased between 2007 and 2018; this is the equivalent to more than 3000 Wembley stadiums.

Companies are also investing heavily in their warehousing technology, with companies are spending between £30m and £100m to innovate by using a fully autonomous supply chain such as cutting-edge robotics and automated pickers.

It’s a fast-paced market, ever demanding and filled with impatient shoppers. In UK, 30-40% of the warehouse occupiers are ecommerce and analysts predict that while their penetration is currently peaking between 17% and 20% of total UK sales, this could easily reach 22% or higher.

What we are experiencing at the moment, is a “shared economy” that has completely reshaped the estate industry. Warehouses are changing the way their space is utilized and increasing number of occupiers are renting space on-demand or pay-as-you-go basis and booking pallet space by day or week. 

This “agile” way to look for space is the foundation of marketplace technologies that can support retailers to respond to the “want it now” culture. 

LogistCompare, the “Airbnb for warehousing” as per our customers’ statement, offers customers the opportunity to make the transition from the traditional warehouse search – which is not able to match the fast-paced customer demand- to an agile distribution model, which allows retailers to search, compare and book warehouse space instantly.

Currently 19% of customers want deliveries within 30 minutes, 28% in less than 1 hour and 21% in less than 2 hours. However, customers are also reluctant to pay more for faster deliveries with 54% opting out if asked to pay more. 

The demand for faster deliveries is increasing the demand for urban warehouses. When building in dense-populated cities, the only way to expand space is vertically. 

LogistCompare has a network of over 2,000 warehouses scattered across UK, which are easily reachable through our platform. Our typical customer can book space on-demand, for a short or long- term storage with full visibility of any additional logistics services supplied by the provider. 

We are witnessing an increase in customers that want short leases; even when they have invested heavily upfront, it’s hard for them to invest in long term (10 years or so) because of the ever-changing demand for space capacity. Retailers are increasingly adopting the “on-demand” warehouse model that allows them to optimise logistics competencies, to increase speed of deliveries while saving in distribution and fixed costs.

Our customers’ demand for additional space stems from various scenarios including 1) seasonal demands – most of our clients require 25-30% additional capacity between September and December 2) Samples of new orders 3) After-Sale inventory  and 4) Over-flow capacity.

We are also witnessing an increasing number of organizations (often bigger retailers) that have spare capacity (20-40% extra space) during the first two quarters of the year. Companies often do not have plans for this excess capacity other than to accept it as the price to pay to do business. With peaks between October and December, they need to make sure that they can have enough capacity for those months, and therefore absorb the costs for the rest of the year.

LogistCompare helps customers to fully utilize their space during the year and to generate revenue from dead space that is killing their profits daily. 

There is a sea change in the way companies are implementing their distribution model. Marketplace technologies strategically support customers with innovative new solutions to maximise these opportunities. 

This is really a game changer!