The AirBnB of warehousing

Thanks to new technologies, traditional businesses have been revolutionised, for example the hotel industry and temporary housing industry with AirBnB. The same concept is now being applied to warehousing by a Seattle based start-up named Flexe. It is a cloud based platform that connects organizations that need warehousing space to organizations with extra space.

Technology enablers

Multi-user warehouse have been owned by 3PL for long, but as for today, there is no tailor-made, highly flexible warehousing service offer for a company willing to pay. By focusing on profitable service offer (transshipment, picking, order preparation) rather than on stock holding would probably enable new offers to emerge.

With fast e-commerce development to be expected, related logistic needs will become more common, such as same-day deliveries and highly flexible charge. More and more retailers want to go online, but don’t always have the necessary operational knowledge. The new wave of multi-user warehouses will have to address these needs and likely focus on high-turnover items. Economies of scale and good optimisation can allow to locate new high-turnover, multi-user warehouses near the cities, to massify last-mile deliveries and reduce their distance.

This new warehousing offer could attract small e-commerce retailers who don’t have their own facility, companies that want extra-fast delivery for a special offer or expect a high demand for promotional and featured items.

Flexe : the AirBnB of warehousing

In less than five years, Flexe has created a marketplace of spare storage space in 550 warehouses, quickly establishing better geographic coverage than the vast delivery network that Amazon.com Inc. spent decades and billions building. Flexe did it without spending a nickel on facilities and already has 25 million square feet of storage, about 25 percent of Amazon’s capacity, and expects to add 10 million square feet this year. Merchants book storage space via a simple-to-navigate website; Flexe is essentially the AirBnB of warehousing.

Flexe approach

Shoppers' accelerating shift online is straining warehouse space around the U.S., pushing the vacancy rate to the lowest level in 17 years. Flexe is tapping into an inventory of unused space that doesn't show up in the vacancy measure. That space is tied up in long-term contracts, but much of it goes unused for months at a time. Beverage companies and home-improvement stores build warehouses with capacity for the summer months when their business peaks, leaving them with extra space the rest of the year. Warehouses operated by Halloween costume wholesalers empty out just as the holiday shopping season hits and most retailers need more space. Flexe is arbitraging the mismatch between supply and demand, taking a commission for each transaction.

Today, the company has 200 partners. Iron Mountain, which provides document storage for financial, legal, healthcare and government clients, signed on with Flexe two years ago to sell extra space in its 1,000 facilities in 90 markets.

Final thoughts

New players like Flexi have succeeded in bringing collaborative economy to warehousing. Flexe has redefined the warehousing industry by finding spare warehouse space for e-commerce merchants, and is now set to offer overnight delivery all over the U.S.

Going forward, new entrants like Flexe will be the market maker in warehousing space. These players will certify new warehouse providers that want to list their services, provide for standard business terms, prescribe an operational system that provides warehouse management capabilities, bill the customers on behalf of the warehouse operators, collect the fees (inclusive of a markup to pay for their services), and monitor transactions to ensure customers are getting quality service.