When traditional solutions fall short, on-demand warehousing offers a new take on last-mile delivery.
So important, but also a potential budget-buster.
We are talking about the last mile of delivery and its significant share in parcel delivery cost. The distance between the final fulfillment center and your customers’ front door often accounts for 50% or more of the total, making it — by far — the most expensive step of the product journey.
Needless to say, if there’s any link in the supply chain that warrants careful examination, the last mile is it. In an environment where e-commerce consumers ideally want fast, free shipping, the retail industry feels the drive both to refine last-mile logistics and to cut last-mile delivery costs. Large e-commerce players and a variety of startups have all identified last-mile services as an area where it can really pay to blaze ahead of the competition.
As a JLL manager points out: “Last-mile distribution within dense U.S. cities requires the right location, the right space and the right price – and that calls for creativity in our industry.”
So how can you get creative and strike a balance between cost and accelerated e-commerce?
Last-mile delivery: The challenges
For decades, the primary recipe for warehousing was simple enough: find a warehouse in suburbia to store as many items as possible at minimum cost. Bulk fulfillment to retail stores made sense when lead times were long and consumers were not yet in the click-and-ship mindset.
Now, the retail environment is radically different. Here are just a few examples of factors that affect last-mile logistics:
E-commerce demands: The capital-intensive nature of sorting and full-scale logistics networks. The near necessity of nationwide service offerings. The breadth of the economies of scale. The required access to customers. It all poses significant challenges to startups and small and medium-sized businesses.
Delivery expectations: A few large distribution centers in one part of the country do not cut it when 40% of online shoppers expect free two-day delivery, according to the National Retail Federation.
Solutions not tailored to e-commerce: While large corporations may have the financial bandwidth to grow a fulfillment network of mostly fixed real estate, it is hardly a feasible option for smaller players. And although 3PL contracts may work for some, they tend to be expensive, take long to negotiate, and bring unnecessary risk for businesses with unpredictable growth forecasts.
Not all SKUs are created equal: Far from bulk fulfillment of the past, supply chain managers now have to take into consideration the varying pace of SKUs. An excessively long last mile of best-selling SKUs can quickly run up cost when customers want — at the very least — not to have to pay for shipping.
Competition for warehouse space: Competition for industrial real estate is fierce, especially since so much of the current inventory was built for the pre-ecommerce era. Over the next five years, growth in e-commerce sales will drive demand for more than 850 million square feet, according to Deloitte. Urban and multi-story warehouses have emerged to meet demand, but the road is far from straightforward, as development in dense urban settings comes with a range of barriers to entry. The result is rising warehouse rates that place even more importance on not paying for more than you need.
Last-mile delivery: The good news
The last mile is experiencing disruption from new business models that address consumer demand for ever-faster delivery. Among the key solutions rising to meet the challenge: on-demand warehousing. This means that a business without a nationwide distribution footprint can instantly revamp last-mile delivery operations and bring inventory closer to its customer base without having to commit to long-term warehouse leases across the country
Warehowz is here to help you scale your distribution network and add much-needed agility to that last leg of your supply chain.
Tight warehouse market? You can gain access.
The Warehowz cloud-based on-demand warehousing platform gives you immediate access to available warehouse space and services in some of the country’s most competitive markets. Our partnership with Estes Express has further enhanced our stock of warehouses and added over 200 cross-docking facilities to the selection. You can search our listings right now and access those in addition to our network of partners, including regional e-fulfillment providers and supply chain analytics services.
Surge in demand? Add nodes instantly.
In a matter of days, you can add capacity right where you need it most and — regardless of your organization’s size — provide first-class client services and robust, professional supply chain management. A single, uniform contract swiftly eliminates the headache of nitty-gritty, multi-page documents and speeds up the leasing process.
Fast-moving SKUs? Move them closer.
Positioning select inventory closer to your customer base reduces the total cost of fulfillment by cutting last-mile transportation costs. The Warehowz platform lets you optimize fulfillment locations without the added burden of start-up and overhead expenses.
The impact will be felt by your bottom line. Let us tell you more. Contact us today.