On-demand warehousing that lets you scale up, down, or sideways without commitments to a long-term lease.
Flexibility in fulfillment services is something brands and retailers are playing catch up to due to the change in eCommerce services driven by customer demands.
With the traditional solutions for last-mile delivery, customers were okay with waiting 5 to 10 days to get their items. Today, the average last-mile delivery day has significantly dropped to 1 to 2 days.
Although last-mile delivery time can vary based on the type of delivery, the location, and the service used, the growing popularity of on-demand warehousing is pushing the limits and closing the gaps for customer satisfaction.
This blog post will discuss on-demand warehouse storage, how to achieve it, and the benefits.
Table of Content:
- What is on-demand warehousing?
- How does on-demand warehousing work?
- Why do you need on-demand warehousing?
- Warehouse storage vs on-demand storage
What is on-demand warehousing?
On-demand warehousing differs from traditional warehousing in that it lets you scale up, down, or sideways without commitments to a long-term lease.
It is a fulfillment model that allows brands/retailers to negotiate with multiple warehouses across geographical locations, building a global fulfillment network that is cost-effective and demand-responsive while maximizing last-mile delivery that meets customer expectations.
Businesses can scale quickly and be flexible with fulfillment services without breaking the bank.
On-demand warehousing is more efficient with a fulfillment partner with a global warehouse storage network. This streamlines SLAs and reduces costs yet keeps reaching emerging target markets uncompromised.
How does on-demand warehousing work?
On-demand warehousing operates on the principle of flexibility and scalability, allowing your business to secure warehouse space and services as needed without committing to long-term leases.
It’s like Airbnb for warehousing, which connects businesses needing additional storage space with available warehouse providers.
Let's take an example to understand the concept of on-demand warehousing better.
For instance, you run a trendy eCommerce store for clothing with a fluctuating inventory that reflects the latest fashion trends.
Working with a 3PL Partner that offers On-Demand Warehousing
Having launched a limited-edition collection, opting for traditional warehousing would lock you into a long-term lease for a space that might be too big most of the year, leaving you paying for unused space.
On-demand warehousing removes the burden of paying for excess storage space.
Working with a fulfillment partner like OPLOG, which has fulfillment services across America, Europe, and the Middle East, you can simply book a warehouse storage space for the duration of the collection based on demand forecast.
The cost is calculated per square foot, so you only pay for what you use. Think of it as paying for a hotel room, but for only the section your clothes occupy. OPLOG receives your limited-edition collection, stores it, and picks and packs orders as they fly in. You do not need to rent a van and wrestle with logistics or last-mile delivery concerns.
With technology, you can track inventory levels and order fulfillment in real time through an online dashboard on the Warehouse Management System.
So, on-demand warehousing provides agility to win in the ever-changing retail and demand landscape.
Why do you need on-demand warehousing?
Beyond the rapid changes in consumer buying habits and expectations, cross-border shopping also influences on-demand warehouse storage and fulfillment. More on cross-border shopping later.
Getting to and beyond the finish line of consumers’ expectations requires having a flexible fulfillment process that isn’t constrained by location or scale.
Here are vital reasons businesses need on-demand warehousing:
- Scalability and flexibility
- Cost-efficient with lower fixed operating expenses
- Cross-border fulfillment and geographic reach
- Last-mile delivery
- Efficient operations
- Manage risks
Scalability and flexibility
One of the primary reasons to adopt on-demand warehousing is the freedom to scale up and down or sideways, which touches on business flexibility. eCommerce sales come with highs and lows in demands that include factors that are not limited to seasonal, economical, or political.
On-demand warehousing allows for flexible storage capacity based on needs, such as seasonal changes, inventory surges, or market demand.
For example, a startup selling Barbie movie-inspired popcorn could see a surge in sales after partnering with a major streaming platform to offer limited-edition popcorn tied to the movie release.
Unlike traditional warehousing, which doesn't consider seasonality and often locks businesses into a year-long lease to accommodate the expected surge in demand, on-demand warehousing offers a more flexible and cost-effective pay-as-you-use option. This allows the business to secure temporary storage near major distribution centers before the movie's release.
The business can easily adjust its space to accommodate the initial surge by paying only for the required square footage. As the hype surrounding the movie fades, the business can then transition to a smaller, more cost-effective space or even release the space altogether.
Cost-efficient with lower fixed operating expenses
It’s bad business to pay for warehouse storage space that won’t be needed over specific periods. Rather than paying for the whole room, on-demand allows you to save money by paying only for the space you use and avoiding upfront investments in real estate, infrastructure, and equipment that are seasonal necessities.
That way, your business converts more fixed costs to variable costs, minimizing risk exposure to uncertainties in demand.
Optimizing costs frees up money to invest in areas that can be invested in other areas that drive profit, like inventory, marketing, or hiring.
US-based merchants account for nearly 50% of cross-border e-commerce purchases.
On-demand warehousing removes the burden of businesses investing heavily in cross-border fulfillment, which could sometimes be an exploration attempt into markets with potential consumers.
Partnering with an on-demand service provider like OPLOG expands your reach and allows you to test out markets with potential sales and revenue growth at a low cost. You worry less about regional regulations and clearance procedures while taking advantage of micro-fulfillment centers in urban areas closer to consumers.
Securing retail business success now hinges on same-day, last-mile delivery, driven by customer demand for swift fulfillment and distribution.
This growing demand has prompted businesses to innovate, adopting new logistic models to boost parcel volume and accelerate the pace of deliveries.
90% of consumers see 2- to 3-day shipping as the delivery baseline. 38% expect deliveries on the same day. (FarEye Survey)
On-demand lets you get closer to potential markets at a lower cost, slashing wait times and shipping distances while meeting consumers' delivery expectations.
Working with advanced warehouse management systems, which streamline inventory management, order fulfillment, and transportation of goods in real-time, makes monitoring and tracking operations easier.
OPLOG’s advanced Warehouse Management System allows the connection and visualization of warehouses on one platform, giving access to sales data, storage, shipments, and inventory levels.
Access to in-depth data can help provide insights for informed decisions on expanding reach and entering new markets.
On-demand warehousing enables you to efficiently manage the risks associated with long-term investments in emerging markets.
Instead of being locked into a long-term commitment, you can have flexibility and adjust warehousing needs based on demand, seasonality, and other factors that may impact your business.
Another reason for on-demand warehousing is that it eliminates the need to depend on the actions of competitors who may have the financial resources to commit to a long-term lease or a third-party logistics provider (3PL).
Working with an experienced on-demand fulfillment partner, you can access a network of warehouses and distribution centers across different locations, helping you streamline locations that require more resources. This can help improve your overall supply chain efficiency, giving your business a competitive edge.
Warehouse storage vs on-demand storage
Warehouse storage traditionally involves renting or owning permanent space, while on-demand storage allows for flexible, short-term contracts.
Here are some of the main differences between warehouse storage and on-demand storage
On-demand warehousing is a game-changer in the eCommerce industry. It allows businesses to scale up or down without being locked into long-term leases, which can be costly and inefficient.
With the rise in customer demand for fast and reliable last-mile delivery, on-demand warehousing can help you meet these expectations while keeping costs low. It is an excellent solution for businesses that have fluctuating inventory and need to adapt to changing market trends.
By partnering with a fulfillment provider like OPLOG, you can benefit from a global network of warehouses that can help reach emerging markets while reducing logistics costs.
On-demand warehousing is the future of warehousing, and businesses that embrace this concept will be well-positioned to succeed in the ever-changing retail landscape.