The Warehousing and Fulfillment Industry is Changing from the Inside Out

Changes in the Warehousing and Fulfillment IndustryWarehousing and fulfillment – two words that bring up mental images of huge structures, palletized goods, and complex shipping rules. Some large brands have the resources to tackle these processes on their own. Many small businesses, however, tend to struggle to find the warehousing and fulfillment solutions that work best for them.

Recent shifts are altering that landscape further, as e-commerce selling and marketplaces grow in popularity. What was once a drab, uninteresting industry has transformed into something much “sexier.” Budding interest in the sector has brought a lot of changes – some for the better and some that remain to be seen.

In fact, the industry is changing so rapidly that it is becoming somewhat unrecognizable in many ways. In this article we will explore some of these more seismic shifts and look towards some of the changes that are forever altering the landscape of warehousing and fulfillment forever.

The Astonishing Shifts Within the Warehousing and Fulfillment Industry

Brands Morphing into Fulfillment Services Companies

As has always been the case, many brands and companies that sell products choose to pursue their own fulfillment operations – in many cases because they can’t find an outsourced fulfillment service that meets all of their needs. But what is happening more frequently is that more and more of these brands are leveraging their own in-house fulfillment divisions into the creation of a full-service outsourced fulfillment operation. One of our own customers, Next Level Resource Partners, successfully achieved this metamorphosis. NLRP began as a sporting goods business and has evolved into an organization that also offers highly customized fulfillment services.

“We have always managed our back of house operations for our brand Harrow Sports, so the formation of NLRP was very organic,” noted Keith Krasney, V.P. of sales of Next Level Resource Partners. “Our sporting goods business is extremely custom & specialized and it would be difficult to turn that over to a 3rd party. To us it was clear, there are thousands of brands who need specialized, white glove services and we had decades of experience via our own brand. The ability to think like a brand owner allows us to provide a very consultative approach to our clients. Some of the biggest pain points our apparel customers experience when attempting to outsource with other providers are their extremely high SKU counts, the dynamic storage space requirements needed, the strict process controls necessary to pick similar and “like” items, and the specialized services needed the would require customization. We’ve done it well for years, so it was only natural to help others. This has streamlined our supply chain, increased our capabilities, and has allowed the company to help numerous other brands that need specialized fulfillment services as well.”

Easy Access to Technology and Airbnb Style Fulfillment Networks

Technology, in part, has fueled some of this shift. Currently, it is easier than ever to procure highly sophisticated warehouse management systems to “become” a third party logistics warehousing company (3PL). These systems, in many cases, integrate with shopping carts, marketplaces, and shipping platforms – making third party fulfillment more attainable for newbie 3PLs.

Other brands– that aren’t even fulfillment providers– are also starting to plug-in to Airbnb-style fulfillment networks. These provide an easy opportunity to amass additional revenue streams. Simply put, these networks allow anyone with a warehouse to plug into their warehouse management system and use their technology to process warehousing (and in some cases, fulfilment) for other businesses that need additional help. In the case of these Airbnb-style options, there are some significant potential downfalls (read here for more details), but they are gaining in popularity nonetheless.

Fulfillment Companies are Incubating Small Businesses

Fulfillment companies are changing the way they do business, too. Some of them have even begun to “incubate” small businesses. This partnership helps small businesses grow thanks to fulfillment companies’ support. Fulfillment companies may take any number of steps to help incubate a small business, including:

  • Assisting with marketing (especially online marketing services such as paid search marketing and search engine optimization)
  • Providing fulfillment spaces for collaboration
  • Connecting small businesses with investors
  • Placing small businesses in flex spaces at fulfillment centers so that they can “grow into” more advanced fulfillment services

Even the Big Online Selling Platforms are Shifting Towards Fulfilment

If you try to think of the biggest corporate name in the fulfillment world today, your mind probably flies to Amazon. We don’t blame you! Amazon is still a giant in the realm of fulfillment, but other big players are beginning to recognize opportunities in the industry, too.

Shopify, Walmart, eBay, and other commerce leaders are inching further into the fulfillment world to compete with Amazon. Nobody can predict how these shifts will play out – for Amazon or for The Other Guys. But they’re changing the landscape of fulfillment as experts know it.

Fulfillment Centers and Businesses Working Together for Expansion

Fulfillment centers have even started to partner strategically with other businesses that have idle warehouse space. More and more we’re hearing stories of companies in our vast network of warehouses where, instead of procuring and leasing warehouse space in a new market, they are hunting down a company with idle warehouse space in their target new market and partnering up with them to expand into that new market.

Here’s how it works – rather than starting a new operation in a new market from the ground up, they simply train the partner company’s staff on systems and processes used, spend some time with them for a short period of time overseeing the training process, and then remotely monitor their performance alongside occasional visits. Then, once the operation grows enough, they lease or purchase space in the area and branch out on their own.

The entire process mitigates risk and ramps up the time to market in new locations. Procuring warehousing is expensive, difficult, and comes with a plethora of red tape. In some cases, it’s easier to work together with other businesses to create a solution somewhere in the middle.

Co-Warehousing with Other Merchants

You’ve heard about co-working, but how about co-warehousing?

Co-warehouse space is beginning to pop up across the country. In these spaces, self-fulfillers have the freedom to rent and share flex space as desired (or necessary). This allows small brands to handle shipping services without committing to the lease of a full warehouse on their own. Places like Saltbox in Atlanta are pioneering this new option. Usually, the co-warehouse space will provide warehouse space for storage, forklifts or pallet jacks, shipping stations, pick areas, and other aspects needed to perform the entire spectrum of do-it-yourself fulfillment.

Change is the New Constant for the Warehousing and Fulfillment Industry

These new changes are helping sellers and distributors of products find creative solutions to their problems and challenges. In the coming years, we expect to see more and more “outside of the box” thinking in this otherwise very predictable and historically undisrupted industry.

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