As retailers need to deliver goods even faster and logistics companies struggle to run that last mile, access to flexible on-demand space in warehouses is a growing trend.
On-demand warehouse space involves short-term leases of various sizes and durations — as much space as the customer needs, when it needs it, in a convenient location.
“It’s about agility,” Jon Sleeman, JLL’s EMEA Logistics & Industrial research director, wrote in an article published on the company’s website. “Retailers need to be able to scale up and down and have highly variable requirements — be that Black Friday, Christmas or sales season.”
Logistics specialists are responding to the hunger for on-demand warehouse space.
Last year, for example, UPS launched a subsidiary called Ware2Go, a platform that matches companies in need of space with space providers. It recruits and certifies warehouses for merchants, allowing them to keep up with new e-commerce growth, CNBC reports.
Within the next decade or so, on-demand warehousing services will become an alternative to traditional leasing, Cushman & Wakefield Senior Managing Director Ben Conwell writes in Inbound Logistics.
“They will not dominate the industry, but they will grow to fill a gap in the market,” Conwell said.
Investors are also interested in on-demand warehousing. In April, California-based Flowspace, an on-demand warehousing and fulfillment startup, raised $12M in a Series A investment. Canvas Ventures led the investment, with Moment Ventures, 1984 Ventures and Y Combinator also participating.
Flowspace offers cloud-based inventory, order and warehouse management software, a nationwide warehouse network and month-to-month pricing. The company thus aims to help small and midsize companies find warehouses for their overflow, a market it believes is underserved.
“At Flowspace, customers can contact us if they need warehouse space, and typically within a day or so, we are able to find them a warehouse,” Flowspace CEO Ben Eachus told Freightwaves.
Flexe, another on-demand warehouse space specialist, has raised nearly $19M from investors betting that shippers need flexibility in scaling their warehousing needs.