Executive Briefings

The Sharing Economy Is Disrupting Traditional Warehousing

Analyst Insight: The sharing economy has been disrupting and transforming industries, with companies like Uber disrupting the taxi industry and Airbnb disrupting the hospitality industry. Now, even the very mature space of warehousing is in the process of disruption as warehouse-sharing platforms emerge that are providing benefits to both shippers and facility owners. - John Santagate, research manager, IDC

The Sharing Economy Is Disrupting Traditional Warehousing

The sharing economy is really all about how individuals and companies can turn idle and excess capacity of existing assets into revenue and profit by offering up usage of their assets for sale. Part of the challenge of managing a network of warehousing is that there is often excess capacity and available resources that sit idle, just in case it is needed in the future. Warehousing, a tremendously capital-intensive function, has just become the next target of the sharing economy.

Imagine for a moment that you own or operate a network of warehouses operating at an average capacity of 80 percent with the remaining 20 percent of capacity unused. Traditionally, this excess capacity is simply that, excess capacity. Today, however, with the emergence of companies such as Flexe, warehouse owners and operators have a platform for turning that excess capacity into a revenue-generating engine by offering “warehouse as a service” to other companies in need of space.

On the other side of the equation, imagine that you are a rapidly growing manufacturer that has outgrown your own capacity. Traditionally, you would run a network optimization project to understand your best options for building out or buying new facilities, at an extreme cost and often long time horizon. Now, however, this scenario changes with the option of spot buying warehouse capacity to support your needs rather than being limited to alternative high-cost options.

Or, perhaps part of your business is based on highly seasonal products that require high storage capacity for short periods of time. Your options are to engage with a 3PL to manage things for you, shuffle around your own existing capacity to support short bursts of inventory and demand, or keep excess capacity. Again, with the emergence of warehouse-sharing platforms, this problem is reduced as the option now exists to enter into short-term warehousing agreements with existing facilities outside of your own network that have excess capacity.

Such sharing of capacity has become a solution to the very common problem of obtaining space and resources with limited capital investment requirements. Additionally, this strategy can help with the challenge of achieving a “micrologisics network” capable of positioning inventory closer to the customer in order to reduce delivery speed to customers that are increasingly demanding next-day and same-day service.

The sharing economy has shown tremendous value in delivering incremental revenue for asset owners and improving the options for customers. Such sharing platforms are far more common today in the consumer sector, but they are most certainly expanding into the business arena, with warehouse sharing a logical option that has clear benefits to both shippers and warehouse operators.

The Outlook

The cost and complexity associated with owning and operating a network of warehouses can be quite high. Often, companies simply accept excess capacity as an overhead expense. It is time for companies to rethink how they manage excess capacity and look for ways to turn waste into profit. The sharing economy is indeed an outlet for companies to deliver incremental revenue out of their warehouse network and for shippers to leverage a modern network to better manage their needs for warehousing space.

The sharing economy is really all about how individuals and companies can turn idle and excess capacity of existing assets into revenue and profit by offering up usage of their assets for sale. Part of the challenge of managing a network of warehousing is that there is often excess capacity and available resources that sit idle, just in case it is needed in the future. Warehousing, a tremendously capital-intensive function, has just become the next target of the sharing economy.

Imagine for a moment that you own or operate a network of warehouses operating at an average capacity of 80 percent with the remaining 20 percent of capacity unused. Traditionally, this excess capacity is simply that, excess capacity. Today, however, with the emergence of companies such as Flexe, warehouse owners and operators have a platform for turning that excess capacity into a revenue-generating engine by offering “warehouse as a service” to other companies in need of space.

On the other side of the equation, imagine that you are a rapidly growing manufacturer that has outgrown your own capacity. Traditionally, you would run a network optimization project to understand your best options for building out or buying new facilities, at an extreme cost and often long time horizon. Now, however, this scenario changes with the option of spot buying warehouse capacity to support your needs rather than being limited to alternative high-cost options.

Or, perhaps part of your business is based on highly seasonal products that require high storage capacity for short periods of time. Your options are to engage with a 3PL to manage things for you, shuffle around your own existing capacity to support short bursts of inventory and demand, or keep excess capacity. Again, with the emergence of warehouse-sharing platforms, this problem is reduced as the option now exists to enter into short-term warehousing agreements with existing facilities outside of your own network that have excess capacity.

Such sharing of capacity has become a solution to the very common problem of obtaining space and resources with limited capital investment requirements. Additionally, this strategy can help with the challenge of achieving a “micrologisics network” capable of positioning inventory closer to the customer in order to reduce delivery speed to customers that are increasingly demanding next-day and same-day service.

The sharing economy has shown tremendous value in delivering incremental revenue for asset owners and improving the options for customers. Such sharing platforms are far more common today in the consumer sector, but they are most certainly expanding into the business arena, with warehouse sharing a logical option that has clear benefits to both shippers and warehouse operators.

The Outlook

The cost and complexity associated with owning and operating a network of warehouses can be quite high. Often, companies simply accept excess capacity as an overhead expense. It is time for companies to rethink how they manage excess capacity and look for ways to turn waste into profit. The sharing economy is indeed an outlet for companies to deliver incremental revenue out of their warehouse network and for shippers to leverage a modern network to better manage their needs for warehousing space.

The Sharing Economy Is Disrupting Traditional Warehousing