According to India Brand Equity Foundation, the Indian e-commerce market is expected to grow upto US$ 200 billion by 2026 from US$ 38.5 billion in 2017. The rise in the ecommerce market has not only transformed customer behaviour but has also revolutionised supply chains and businesses, making On-demand warehousing the new buzz word for the industry. We explore the rise of the trend of On-demand warehousing along with its benefits, hiccups in adoption and much more.
The rise of the e-commerce industry has sidelined the old school way of warehousing and fulfillment and has led the industry towards a new way of managing storage, fulfilment, and retail distribution known as ‘On-demand Warehousing’.
Ecommerce has drastically changed consumers’ shopping behaviour, and has made them more concerned about the nature of the products and their real value, forcing retailers to focus on quality and customer experience, part of which is the instantaneous availability of their chosen purchases.
While commenting on the shift of warehousing technique, Alexandre Amine Soufiani, Managing Director – FM Logistic India says, “The shift in purchasing behaviors has changed the very nature of the warehousing and distribution industry with e-commerce providers now almost forming their own sector and third party logistics providers needing to offer return logistics capabilities as well as tracking abilities directly to the consumer on top of conventional solutions,”
He further adds, “The very definition of many 3PL providers’ customers demand has now changed so significantly that this alone has had a substantial effect on the industry and now requires its own specialist solutions.”
The new specialist solution has helped the brands and retailers to serve customer better by providing them with scalable, flexible warehousing solution.
Pratik Choudhary, Co-founder, Warehousity said, “The core of on-demand warehousing is that it provides the organizations a network of functional warehouses which play critical role in addressing their fulfilment requirements and as such reduces their distance (actual and in terms of time) many fold from their customers and they are able to reach to their customers much faster.”
Also, it helps the organisations immensely by providing them with operations quality at every fulfilment center.
Mr. Choudhary feels that the concept of providing space and services on an “as needed” basis turns out beneficial for both small as well as large businesses.
“On-demand warehousing is an online marketplace of warehousing services (not only spaces) where users can access the network and use space and services on an “as needed” basis. This makes on demand warehousing a very lucrative proposition for a small as well as large scale businesses.”~Pratik Choudhary, Co-founder, Warehousity
Mr. Soufiani, who also feels the same, calls the concept of On-demand warehousing a “game changer” for the small-scale businesses.
“In On-demand Warehousing, logistics service providers are not only handling storage, but also ordering, stocking, picking, packing, shipping, and more. For many business owners – especially small business owners looking to grow and expand – this is a game changer.”~Alexandre Amine Soufiani, Managing Director – FM Logistic India
He feels it supports the myriad ways customers shop today; from online to omnichannel to pop-up shops to pickup-from-stores; it gives businesses to adapt to customers need.
Perks of adopting On-demand Warehousing
The warehousing industry in India requires a lot of structural and business model changes.
Mr. Choudhary while commenting on the same says, “Traditionally, Organisations (users) and Logistics companies have tried doing it linearly and organically so far but as such it has not been able to cope up with the speed of change on the demand side.”
Now considering the demand and the shift of customers shopping pattern, it has become the need of the hour for the logistics companies in India to leave behind the traditional ways of warehousing and rather adapt to On-demand warehousing which is an efficient alternative as compared to the traditional warehousing practices.
According to Mr. Soufiani, “Through on-demand warehousing, logistics service providers can create a distribution-network strategy that is as dynamic as their business needs. It’s a turnkey solution for recurring storage problems.”
There are a host of advantages that On-demand warehousing can address, such as:
Inventory overflow: For planned seasonal peaks or unexpected excess inventory, on-demand warehousing allows retailers and brands to quickly add additional capacity as it’s needed. It’s a turnkey solution for recurring storage problems.
E-commerce Fulfillment: On-demand warehousing for e-commerce fulfillment gives retailers and brands the flexibility to scale their fulfillment networks, as needed, to enhance their direct-to-consumer strategy.
Tech Enabled: The on-demand warehousing significantly reduces the planning to execution time and enhances visibility throughout. The adoption of technology is not at the core of traditional warehouses.
Retail distribution: For brands that distribute their products to retail partners, on-demand warehousing helps sellers offset inventory storage fees and shorten last-mile transportation by storing goods closer to intake centres. While a traditional warehouse can take as many as 30-90 days to be ready, the on-demand warehousing can help one start servicing a customer within 3-5 days.
It is “Plug & Play”: Basic level of operation quality and skill set of workers are secured even before the start of the operation. This is like making warehousing available “off the shelf”.
Logisticians’ Inchmeal adoption of On-demand Warehousing
Considering the multitude of benefits, many companies have adopted new innovations in order to serve customers better and have an edge over the rest. Companies like FM Logistic have already started operating Multi Client Facilities (MCFs) in the country.
“We recently broke ground for our own MCF at Jhajjar, near Gurugram. This new A+ grade facility will be the first in India to combine LEED and FM Global Certification. With a built-up area of 700,000 sq.ft the Jhajjar MCF enjoys strategic access to Kundali, Manesar and Palwal expressways for faster connectivity to all major consumption centres in the North, ” informed Mr. Soufiani
He adds, “All our MCFs are furnished with the best-in-class safety and security features, offer cost efficient quality, storage and handling services.”
On the other hand, there are many logisticians who are still hesitant of the adoption despite all the perks.
Mr. Choudhary explains that the adoption to a new change is easier said than done, andhe adds that it is a slow process and requires time.
In his words, “It is about, either leading the change or adapting to one. And both are easier said than done. Further most of us are used to incremental changes around us and that’s how we adapt, slowly-slowly.E-commerce was a Business Model change and it disrupted many traditional businesses is the last decade. Today most businesses want to be in the e-commerce band-wagon.”
While further commenting on the same, he adds, “This is a business model change and is about the new age supply chain. This would be accepted through the benefits it delivers to the users & other stake holders. And few of users (early adopters) have started tasting the benefits of it. Rest will follow as they get more awareness about this.”
Some of the key challenges faced in adoption are as follow:
■ Laws and regulations (e.g., security, insurance, liability, workforce protection) hinder peer-to-peer services
■ Horizontal integration of collaborative logistics in existing business models remains difficult among competitors
■ Trust issue between users can limit adoption.
This story originally appeared in the March issue of the Logistics Insider magazine. To read the full story, click here.