Making money from empty warehouse space

A warehouse is an expensive asset and failing to make the most of that asset is a missed opportunity at best or the reason the shutters come down permanently at worst.

Running a quality warehousing and fulfillment operation provides a major competitive edge but being able to do it very profitably is where businesses really start to shine.

We consider a way one of our own customers has recently been making good money with minimal effort alongside their core business activities.

Renting empty warehouse space

If you are a 3rd party logistics business, you might not consider this a new idea! The third party logistics and warehousing industry spend each day renting space in their own warehouses and trucks on behalf of the stock owners.

In the UK, as with many countries, land is a prime commodity and premium locations close to motorways and transport links don’t come cheap.

Wholesale distributors, manufacturers and retailers who own their own warehouses often find themselves with an excess of space for periods of time throughout the year.

Most warehousing operations will experiences bouts of seasonality regardless of the industry they operate in. This could be capitalised on during those quieter times when space is abundant.

Many businesses who have taken the decision to invest in acquiring their own warehouse facilities will usually have planned for the long term. Considering what a business may need in 5 or 10 years can be very difficult and businesses can find they’ve given themselves more Sq Ft than they’ll need for a long time!

We consider the two key ways you could look to make money from your free space.

Space only

Space only renting would typically involve specifying an area away from your own stock for a 3rd party to come in and take over. This would normally be done with their own people and equipment and they’d use that space on a long or short term basis.

If you need systems in place for a 6 month period, this is possible with a cloud WMS service

This model is very straight forward. A term is agreed for an amount of space and a rent is agreed for that term. Overheads are minimal and invoicing is very straight forward.

The downside to this model is that you may have teams of people within your own facility who are working to different standards and processes. This could cause confusion within your own operation causing your core business to suffer as a result.

You may also limit your options to the type of business you are able to share your facility with. Commercially sensitive information may be at risk with this shared working approach running alongside your own stock and warehousing operation.

Managed service

The alternative is to provide a fully managed service using your own people and equipment. 3rd parties would send their own stock to your warehouse for you to check off, perhaps quality check on their behalf, put-away for storage and then pick and ship it again when the orders arrive.

Many distribution businesses have enough problems managing their own stock so the thought of making that harder by having to do the same for someone else might be a laughable idea but hear us out!

a very good source of income for a business during quiet periods or long term.

When renting empty space as a managed service, a good warehouse management application allows you to charge for space in a variety of ways. These include by pallet, by case, by item, by location or by phyiscal cubic space taken up. This is all done automatically as part of booking goods in and out.

By keeping track of all items effectively and with clear rules and system segregation of stock, overheads can be kept to an absolute minimum making this a very good source of income for a business during quiet periods or long term.

Providing a managed service will always allow you to charge a premium but getting it right is absolutely key otherwise all gains can be quickly wiped out through poor processes and a subsequent poor service to clients.

Providing a managed service does give you much more control

Providing a managed service does give you much more control over your own staff, processes and systems.

Using a quality cloud warehouse management application, the overheads of using great software to support these new revenue streams can be 100% based on the demand you place on the system.

If you need these systems in place for a 6 month period, this is completely possible allowing you to provide a great service to clients for these periods of time as needed without incurring a large upfront cost which suddenly makes the whole venture very risky and businesses are reluctant to take advantage.

Where do we start?

Speak to one of our team to understand how ClarusWMS’ simple cloud subscription platform can cost effectively support new revenue streams by promoting better customer service, better results and efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.

ClarusWMS is a UK based supplier of cloud warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution and manufacturing.

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