With the explosion of e-commerce, demand for warehouse space has soared and the boom shows no sign of slowing down. In 2016, logistics take-up hit record levels with 29.3 million sq ft. of space acquired and a record £2.7 billion invested into single-asset logistics units, according to CBRE.
Whilst most aspects of the logistics sector are continuing to become more agile and responsive, retailers are still constrained in one key area: their warehouse leases. In a market where the ability to scale up and down 'on demand' is becoming critical to retail success, an inability to flex their lease is causing retailers unnecessary headaches.
Warehousing as a service, coined by Stowga, is a new solution that is helping retailers and organisations to optimise their supply chain and make profitable use of any surplus space they have by offering it to other organisations who need more space.
Two companies that have been using this service model are Diamond Logistics and pi-top, and they've both grown thanks to it.
Diamond Logistics provides end-to-end fulfilment solutions for organisations across the UK, offering warehouses, carriers and customers services relating to picking and dispatching goods for its customers.
One of the primary challenges faced by Diamond Logistics and others in the industry was finding customers to fill their warehouse space. The lead generation process was often very manual, taking a few months before a prospective customer decided they wanted to move out of their existing warehouse. This is partly down to the inflexibility of the current warehousing model where organisations are tied into long leases, but also the nature of the industry. Often, it can take up to 6 months from initial contact to negotiate paperwork and legals.
Hon Leung, Managing Director at Diamond Logistics, comments, "The process for finding new customers to fill our warehouses was very cumbersome and took up a lot of our time. We needed a solution that could help us beat this challenge and effectively manage the process of sourcing and signing new customers so we could spend time offering the services we were really good at, while still nurturing the longer term leads. Stowga has really helped us to fulfil this goal."
pi-top sells affordable computing platforms for schools that allow them to experiment with coding and electronics. Their hardware is powered by Raspberry-Pi, a customisable embedded computer and was founded in 2014 after raising money on Indiegogo.
As pi-top began to grow it was clear that a flexible UK warehouse was going to be needed to hold the products coming directly from their factory in Shenzhen, China, which could sometimes take up to six weeks to reach the UK.
Paul Callaghan, Chief Operating Officer, at pi-top, comments, "We knew we needed a warehouse in the UK, but we didn't have a huge amount of knowledge about the costs and availability of warehouses. One thing we did know was that we didn't have a working solution that we could scale from our operation base in Shenzhen, which is why we got in touch with Stowga. We wanted to work with someone who knew the market and could help guide us through the process to find the best option for our business, something they were absolutely able to do for us."
"I was already aware of the benefits of Stowga, so when we were looking for a UK warehouse to distribute from, I wasn't hesitant to get in touch," Paul Callaghan explains, "The team recommended several warehouses that would be a good fit for us and we were able to quickly establish the best options for cost, space and quality, and that happened to be Diamond Logistics."
Sanjeev Jeyakumar, Chief Commercial Officer at Stowga, put Diamond Logistics and pi-top in touch after pairing the two companies using their innovative algorithm and database of warehouses. A match that might have never happened, had the two of them carried out their research in a traditional manner. Once matched, the transaction was simple for the companies to confirm using an industry standard service-level agreement (SLA).
Sanjeev comments "By digitising the process of finding warehousing services, Stowga was able to screen pi-top's requirement against thousands of warehouses and use our software to match them with the most relevant sites within seconds. The result was significant cost and time savings - and the most appropriate match for the services required.
Hon Leung, Managing Director at Diamond Logistics, continues, "The process was extremely simple and Stowga guided us through the entire journey. A meeting was quickly set up between ourselves and pi-top, which established whether our warehouse would be suitable. Once this was confirmed, it was only a matter of sorting paperwork and SLAs. It was one of the quickest customer relationships we have managed, taking only four weeks from contact to move in date."
Benefits and future plans
Stowga has been a huge cost and time saving for both pi-top and Diamond Logistics, with the process of identifying, contacting, and signing new customers for Diamond Logistics, moving from a few months to a few weeks.
The partnership with pi-top and Stowga has also allowed Diamond Logistics to grow and increase their own business capacity. "The partnership has allowed us to grow alongside all of our customers, including pi-top. Our original warehouse reached nearly 90% capacity fairly quickly thanks to pi-top's growth, so in November 2017 we moved to a new warehouse which has improved our offering and allowed us to offer an even higher standard of service to our customers. The new 5500 sq. ft. warehouse allows for a dedicated pick and pack section where 500-1000 picks are done daily."
Paul Callaghan also commented on the relationship, "The introduction to Diamond Logistics has given us an all in one solution which has allowed us to focus on our core business and what we care about while still fulfilling our customers' needs. And we were really impressed with how slick the interaction with Stowga has been in order to get to this point. The solution is great for Startups who need to grow and be educated on the logistics industry in order to maximise on connections with warehouse providers. Thanks to Stowga, we have been able to accelerate our growth process and avoid navigating through complex and business limiting warehouse leases."