Airbnb for Warehousing

Last Thursday, I was a participant in an interesting Webinar put on by eft (eyefortransport).  For my part, I was just providing a short preview of the results I’m starting to see from my survey surrounding the best ways to improve warehouse performance.  I’ll be presenting these results at eft’s 3PL Summit, June 16^th through the 18^th in Chicago.

The more interesting part of the webinar related to presentations by Karl Siebrecht, the CEO of Flexe, and Dhruv Agarwal, the CEO at True Fabrications.

Flexe describes itself as a marketplace for warehouse space.  It is a cloud-based marketplace platform analogous to airbnb.  Flexe works in much the same way.

So for example, if you were a distributor of Halloween costumes, following the holiday that warehouse is always far from being fully utilized.  This distributor could list the excess capacity on Flexe and provide companies that need short term warehousing services – perhaps a toy company with a hot new product release – 3PL warehousing services.

Currently, the Flexe online marketplace has over 50 warehouse space provider participants, all based in the U.S.  But Karl says they are growing quickly, and clearly as the number of supplier market participants increases, the opportunities for shippers to save money based on shipping out of a correctly placed warehouse increases.

Flexe is the market maker.  Flexe certifies new warehouse providers that want to list their services, provides for standard business terms, prescribes an operational system that provides warehouse management capabilities, bills 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.

Also speaking was Dhruv, the CEO of True Fabrications.  True Fabrications has used the Flexe site to purchase short term warehouse capacity.  True Fabrications is a distributor of wine accessories, for example products like decanters or foil cutters.  They sell their wares to over 7000 retail outlets.  This is an extremely high growth – 30 to 40 percent per year – and seasonal company.

True Fabrications does have their own warehouse, but their seasonal peak demand has outgrown their ability to service customers out of that warehouse.  And fast growing companies burn cash, so there is need to preserve capital.

In the past, True Fabrications had used 3PLs for warehousing services during the seasonal surge. But there were problems with this.  True Fabrications could not always accurately forecast just how many pallet positions they would need stored.  If they went over what they had contracted for, the 3PLs could not always accommodate their needs.  Further, the 3PLs they were using appear not to have used great systems.  They would lose pallets and were poor at providing visibility to their inventory.

These problems, had led True Fabrications to consider a short term lease for a warehouse that would be operated by them.  But all they needed this capacity for was four months a year.  Further, it is difficult to lease a warehouse for less than three years, and there are additional costs to add racking and hire seasonal labor.  And then after the surge, the warehouse would have to sit idle for much of the year.

By working with Flexe, Dhruv estimates his company saved $300,000 last year in comparison to the lease and operate strategy.  Further, the quality of the work was good.  The operators, using the Flexe system, were not losing pallets and were providing good visibility to their inventory.

Karl, like me, will be speaking at the 3PL Summit.  His panel will also include Uber, which is beginning to provide web-based courier services.  I’m looking forward to hearing more.