What is On-Demand Warehousing?

Here is why retailers should give a Serious Look at On-Demand Warehousing

The rise of e-commerce and omnichannel retailing in recent years has transformed logistics. There is no predicting of the market trends when the demand will rise or lag. With online sales, customers can purchase any item from any location. Customers gained a world of convenience. But on the flip side, retailers and supply chain partners struggle to manage inventory and fulfill orders efficiently. 
On-demand warehousing offers a solution to such challenges. 

What is on-demand warehousing?

On-demand warehousing is a relatively new concept involving flexible, short-term, and long-term storage space to help retailers and logistics companies manage inventory and meet customer demands. Conventional inventory management involves only long-term lease of warehouse space. On-demand warehousing allows short-term, temporary rental of spaces for retailers to scale operations up when needed and scale back when the demand wanes. 
How does it work?

On-demand warehousing providers operate a network of warehouse facilities in various locations. They partner with several warehouses and offer such space to businesses needing warehouse space based on service agreements.
Retailers take up warehouse space from on-demand warehouse providers on an as-needed basis. The service provider's access to nationwide or even international networks of warehouses means retailers can choose the size and location of the warehouse space, apart from the rental duration. The providers also offer value-added services such as inventory management, order fulfillment, and transportation. The warehousing providers may even handle order fulfillment, including picking and packing orders and shipping them to customer on behalf of the retailer. 

The service provider takes care of the nitty-gritty, allowing retailers to focus on their core business activities.

Why on-demand warehousing? 

On-demand warehousing disrupts conventional warehousing models such as 3PL and in-house fulfillment. This new shared warehousing, fulfillment, and logistics model offers several advantages compared to traditional approaches.

On-demand warehousing improves delivery times and enables better fulfillment rates. On-demand warehousing makes supply chains resilient. Retailers can leverage on-demand warehousing to operate warehouses in multiple locations and store inventory close to their customers. They can expand their supply chain network at virtually no risk. The benefits include reduced transportation costs and speedier deliveries, offering retailers competitive advantages.

The most significant benefit of on-demand warehousing is flexibility and scalability. 3PL providers require retailers to commit to a fixed space and time, which can be challenging to predict. Alternative third-party fulfillment companies often come with high costs. With on-demand warehousing, retailers can scale up, take additional space during peak periods, and shed space just as easily when the season ends without being tied to costly long-term leases. 
On-demand warehousing can be cost-efficient as well. Most on-demand providers do not require minimum volume requirements. They can still offer volume discounts by aggregating volume from multiple customers. 

Many On Demand service providers offer value-added services in warehouse management and transportation services, improving efficiency and enabling retailers to make timely deliveries. Retailers can benefit from the experience and expertise of the service providers without going through learning curves, trial and error, or investing in expensive training or infrastructure.
On-demand warehousing also helps retailers convert capital expenditure to operational expenditure. The providers typically charge retailers per square foot for warehouse space, number of pallets, containers, etc., and extra charges for additional value-added services. They no longer need to tie up costly upfront capital or spend considerable time recruiting personnel and setting up in-house fulfillment.

Are you looking for a warehouse in the UAE?

Cargoz is partnered with 300+ warehouse service providers all over the UAE. We also offer warehouse management as a service to manage your inventory efficiently. You can now find storage services of a pallet space or rent an entire warehouse in any location of your choice in a matter of minutes. Request a quote now!

Vidhu From Cargoz March 10, 2023
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