At some point, growing e-commerce brands will have to consider how to match rising demand with their current logistics capabilities. Those who do not have the desire to build up their own supply chain often look to the big players for fulfilment solutions.
A Seattle-based start-up is saying that there is another option. Flexe is a cloud-based online marketplace for warehousing space. Its SaaS solution, offered across North America, allows those with spare capacity to rent it out to those who need it.
As previously covered by Ti, Flexe provides lessees with a warehouse management system (WMS), oversees inventory data and operations, provides analytics on real-time data, and automates billing processes. Its on-demand system allows standards contracts to be set up quickly, made on a short-term, 30-day basis.
This benefits e-retailers in a variety of ways. For lessors, it means making money out their free space. For lessees, it allows them to scale up their operations in a short space of time.
The company has grown quickly in recent years. It has over 550 locations, over twice as many as it had last year. Its network covers over 25m sq ft.
The company has clearly grown in confidence too. Flexe has launched a next-day delivery service available to 98% of Americans, saying it is faster than Amazon.
It’s a bold statement. Amazon has approximately 4 times as much US warehousing space as Flexe. Its regional fulfilment sites within its Fulfilment by Amazon (FBA) programme were designed to be closer to end-customers with fast delivery at the core of its business model.
Its intrepid leap into this market space will see it fighting with other major players too. For example, FedEx recently launched FedEx Fulfilment to counteract FBA. Unlike Amazon, it is not interested in product data. Its offers its own transportation services, enabling it to provide end-to-end solutions. The Express division currently offers time-certain 1-3 business day delivery. UPS also controls a significant proportion of the market. Its route optimisation system, ORION, has decreased its transportation costs, and it is these types of technological innovations that give it an edge over its rivals.
Flexe however has managed to build a fulfilment network through a cloud-based service on a broad geographical scale. Its software enables customers to find ideally located fulfilment centres and the platform is integrated with major carriers, enabling them to perform these next-day services. It’s remarkable to think that it has created such a vast network without paying a penny for the facilities.
Being able to scale up in a short space of time without capital is very attractive. Flexe recently agreed a deal to incorporate its software with Llamasoft, a company that offers end-to-end supply chain optimisation solutions. Llamasoft’s confidence in Flexe recognises the growing importance to e-retailers of on-demand warehousing, for those who are effected by seasonality in their industries, expanding quickly or simply cannot afford high real estate prices.
It doesn’t mean it offers a cheap solution though. The size of the bigger players gives them a competitive advantage of Flexe. For smaller companies, renting space through an on-demand platform can be expensive. Those looking to maintain next-day delivery need to utilise plenty of these warehouses. Flexe has a minimum $1,000 monthly fee and the next-day model requires these customers to utilise its warehouses all across the country. It also means losing management of warehouses. Contracts are standard and there is no tailoring to specific needs.
Flexe CEO, Karl Siebrecht, remains confident and is quoted as saying: “For the first time, in history, e-commerce brands have an alternative to Amazon.”
Siebrecht’s ambition cannot be faulted. If Flexe continues to expand at its current rate, it will offer a highly significant proposition to e-retailers.
Source: Transport Intelligence, May 22, 2017
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)