Retail consumer expectations have significantly evolved ever since businesses like Amazon and Walmart introduced streamlined home delivery services. These big corporations have created a supply chain where everything from the ordering of the product to warehouse storage and final mile delivery to the customer’s doorstep is completed in a smooth, connected process.
Most SME retail businesses do not have the kind of budgets to compete with these retailers on an equal footing. Faced with the challenge of rising real estate prices, rent, and store security, they came up with the online retail model.
Business Challenges in an Online Retail Environment
Two of the major problems that retailers have always faced are the storage and display of products for customers. The online store model took care of the display part, as well-designed e-commerce websites let customers browse through hundreds of products at the click of a button. Customers can customise their product searches and quickly find what they need to place an order.
As online stores have become popular now, they’ve created a new challenge for digital retailers, namely distribution. How do you process dozens and hundreds of orders quickly and deliver products to the right customer while keeping costs low and managing everything as smoothly as possible?
The answer lies in on-demand warehouses.
How On-Demand Warehouses Add Value for SME Businesses
On-demand warehouses allow small businesses to outsource their product delivery operations and focus solely on marketing. The staff of most SME online stores consists of a few people. Occasionally, you will even find a single entrepreneur running the whole operation. It wouldn’t be possible for these businesses to operate with so few people without on-demand warehouses.
SME retail businesses can get by because on-demand warehouses take care of everything from storing products and receiving orders to customer delivery and even collection of payment if it’s a cash transaction. These warehouses offer great value in the following ways.
Economies of Scale
Benefit through economies of scale. Today, space allocation in multi-customer warehouses is generally inflexible; a fixed amount of space is allocated for a specified period of time, all on a contractual basis, often without considering actual utilization of the space during the contracted period. By embracing concepts of space sharing using platforms such as www.LogistCompare.com, retail and e-commerce companies can operate a more flexible omnichannel warehousing strategy. Visibility of available space in on-demand warehouses, allows customers to distribute critical or fast-moving inventory across multiple warehouses closer to demand, enabling expedited or even same-day delivery. Storing thousands of products from hundreds of retailers in a single location eliminates also security, storage, rent, personnel, and other administrative costs.
Growth and Scalability
Fixed costs were a limiting factor for business growth. As small retail businesses expanded, they had to rent additional storage space which increased their fixed costs without necessary growing their revenues. With on-demand warehouses, retail businesses can quickly increase their storage space without worrying about buying a new building or putting money down for a lease.
Bulk Buying Discounts
On-demand warehouses allow small retailers to benefit from bulk buying from their suppliers. Previously, small businesses could not avail bulk discounts from manufacturers because they didn’t have storage space in their small stores. On-demand warehouses allow them to get discounts.
Supportive Delivery Expertise
On-demand warehouse businesses are run by professionals and delivery experts. They are trained on customer interaction behaviour and aware of all major routes in their operating area for quick and friendly delivery service. Customers benefit from the growing network size of LSPs, and gain better delivery speeds and efficiency, supported by new and more sophisticated technologies in delivery and customer interaction, thereby enhancing their user-friendliness and level of comfort.
Reduce Rent and Estate Agent Costs
SME retail businesses no longer have to worry about estate agents costs and rents as their warehousing partner takes care of these expenses.
Automate Order Processing
Since the on-demand warehousing partner assumes responsibility for delivery, the SME business does not need to hire its delivery vehicles or personnel. This saving in cost allows small stores to be more competitive.
Looking to use a smart warehousing partner for your business? Get in touch and we’ll help you on-demand!