Supply chain management has become an increasingly sophisticated field in the last 30 years, with new technologies providing ever-more flexible and dynamic ways to move goods from business to consumer.
Until relatively recently, warehousing had been the weak link in that chain, offering customers a business model that had changed little since the 19th century: companies pay a fixed amount of money for a fixed amount of space over a fixed period of time, with little or no regard to the demands of the market.
“Warehousing as a Service” (WaaS) promises to revolutionise that model, providing companies with the ability to add or remove capacity quickly and easily, whenever and wherever it’s needed.
Art of Space spoke to Charlie Pool, the 36-year-old co-founder and CEO of British start-up Stowga, about how Warehousing as a Service is bringing warehousing into the 21st century.
“Warehousing as a Service is an innovative new business model where customers can access warehousing services—storage, pick and pack, fulfilment, etc.—without having to commit to a long-term lease,” Pool explains. “Stowga does this by matching warehouses that have spare capacity to customers looking to take that space, via a monthly pay-as-you-go contract. In doing so, Stowga switches the fixed cost of a lease into a variable cost.”
Turning a liability into an asset
In some ways, WaaS operates on a similar business model to Airbnb, but instead of homeowners renting out spare rooms, WaaS allows warehousing companies with spare capacity to rent that space to companies looking for more flexible storage options.
Stowga model enables companies
to scale up and down
their warehousing dynamically.
“For warehouses the benefit is that it optimises the space they have, as well as the workforce,” says Pool. “It turns a liability into an asset: rent and staff costs are existing operational overheads, so Stowga brings in bonus income that goes straight to the bottom line. It’s free to join the platform, warehouses only pay a success fee—so warehouses no longer need to spend money on advertising, an unknown Return on Investment that is not their core skill, to bring in new customers.”
“For customers taking space, meanwhile, the Stowga model enables companies to scale up and down their warehousing dynamically, in line with their business needs, and free their inventory from the constraints of a single site,” says Pool “The ability to only pay for what you use, and the flexibility to end a contract at any time drastically transforms their underlying economics. Stowga reduces the time taken to contract a warehouse from months to hours, and that speed gives clients the agility to create new supply chains fluidly and dynamically. Companies can test new markets and new business models to innovate rapidly, as well as react to unplanned events at a pace appropriate for today’s business needs.”
Rapid growth and funding
Launched in 2016, Stowga has grown rapidly. The London-based start-up now has eight employees, a network of more than 4,000 warehouses, and, in its first full year, processed more than £700,000 (CZK 20.3 million) in contracts. In addition to warehousing space, Stowga also offers clients a range of other logistics services, including transport, fulfillment, on-demand insurance and factoring.
The company raised £1.8 million in funding in December of last year, at which point it entered into a strategic relationship with CBRE.
“Stowga has a strategic partnership with CBRE where CBRE offers Stowga as a service to its clients,” explains Pool. “CBRE is also a shareholder in Stowga. The plan is to scale Stowga by offering its services to CBRE clients—delivering value for the clients, to Stowga and to CBRE.”
Coming soon to Central Europe?
Stowga currently operates only in the UK but, according to Pool, has its eyes firmly fixed on international expansion. As part of an ambitious international roll-out, there are plans to move into the Central European market within three years.
Stowga isn’t the only company offering Warehousing as a Service but is currently the only WaaS provider in the lucrative UK market, and looks well positioned to take a big bite out of the global warehousing industry.
Given that that market is valued at around CZK 5.2 trillion, and that warehouses typically don’t make use of between 25 and 30 percent of their capacity, the potential for growth is clearly enormous.