The rise of flexible warehousing: part II

For supply chain leaders looking to design their supply chain of the future, flexible warehousing is a disruptive innovation that cannot be ignored. In the second of three blogs, we look at the main flexible warehousing players and how they differ.

Flexible warehousing, utilising a third party’s warehousing facilities on-demand, is a revolutionary supply chain innovation changing the way companies design and manage their supply chains.
 
Key players in the market have approached the concept in different ways – from our research, there are three distinct groups, which are important to understand as companies consider the right model for their business. 
 
Technology-focused start-ups
 
For now, the ‘tech start-ups’ are mostly confined to the US with Flexe and Stord, targeting small-to-medium retailers with technology and customer experience (CX) differentiators.
 
Characterised by a slick online presence, true flexibility (down to one day rentals), transparent pricing and fully online transactions for improved CX, these suppliers are attractive to many of the small start-ups looking for turnkey solutions – that reflect their own focus on technology and CX.  Flexe count the likes of TOMS among their customers.   
 
Logistics industry spin-outs and property brokerage start-ups
 
By contrast, the ‘logistics spin-outs’ and ‘prop tech’ players are dominant in Europe.
 
Logistics spin-outs, such as Swiss-based Log-hub, are focused on taking the third-party logistics (3PL) model online, with many of the established 3PL players using their platform.  They are focused on larger plots of space with longer lets, as well as a range of transport and value-add services.  They have sought to go global early to attract some of the larger blue chips. 
 
However, the platforms are less slick than their tech start-up competitors and have been reluctant to embrace the concept of online price transparency, which is a major disruption to the 3PL community they count in their customer base.
 
Consistent with the real estate sector, the prop tech players, including Stowga in the UK and TimoCom in Europe, target as wide a range of markets as possible hence a diverse book of facilities ranging from small plots to ports, cold chain to hub warehouses and off-market space.
 
Claiming over 4,000 available facilities, Stowga promote the ‘modularisation of warehousing’, the notion that a warehouse can be subdivided and traded online, akin to the co-working office sector.
 
Stowga focus primarily on the demand side, qualifying demand leads for suppliers who then bid auction-style. They have tended to avoid focusing on value-added services or warehouse management system (WMS) provision, instead focusing on bundling property-related services such as a recent innovation to offer insurance through the platform.
 
All three segments continue to innovate and adapt.  As with any start-up sector, there is a significant push for rapid scaling to beat competition with the widely held view that most markets can only sustain one or two major players.  This has led to interesting investment rounds with CBRE, an industrial and commercial real estate company, recently taking a stake in Stowga in the UK and Segro, a warehouse developer and investor, in US-based Flexe .
 
Further evolutions of each model are inevitable, equally as is acquisition activity. This will likely be shaped by ‘early adopter’ customers, with the flexible warehousing start-ups open to changing and adapting their business models in return for scale from some of the larger customers.
 
Less clear is how those being disrupted will respond, with 3PLs, real estate sales and investors most at risk. We will explore these topics in our next blog.