Retailers, e-commerce sites, 3PLs and warehouse providers
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When Karl Siebrecht launched Flexe, an on-demand warehouse provider based on customized software, he successfully met a need within the warehousing market: to utilize unused space, improve cost-efficiency for retailers and give 3PLs a chance to turn a profit. Since the company's 2013 launch, the Flexe network has expanded from Seattle down to southern California and now nationwide to include companies from a variety of industries, even Fortune 1000 companies.
Flexe's successful venture to provide a sustainable solution to a big logistics problem is the reason why Supply Chain Dive bestows the company with the Innovator and Disruptor of the Year Award.
Flexe aims to decrease the amount of unused warehouse capacity
Flexe is a software platform that matches unused warehouse space with retailers who need space. That way, the warehouse provider makes money year round by avoiding empty space, while the retailer finds the right amount of space for its specific needs. Warehouse providers — mainly 3PLs — and e-commerce companies or retailers in need of warehouse space are the two types of customers that use Flexe.
Until Flexe arrived, retailers would rent out big warehouses that would be filled to the brim during peak season, but then sit more than half empty during the off-season. Not only would they waste space, but they'd also lose money paying for space they weren't using. Siebrecht said more than 20-30% of warehouse capacity is underutilized, and Flexe works to bring that stat down.
"Our vision is that on-demand warehousing will be 30% of total warehousing," Siebrecht said.
Flexe Network by regionData from Flexe
A solid software platform is key to success
Even though the company is technically still a startup — the company launched in 2013 — it has grown by multiples every year. According to Siebrecht, Flexe's growth has tripled YoY, and he attributes that mainly to the company's solid funding base and "robust" software platform.
"We’ve seen some other companies that look like they’re doing something similar to us, it’s kind of hard to tell based on what their website says, but we haven’t seen any of these companies get funding in investment capital to build out their platform and drive growth, which is a very important thing," Siebrecht said. "The core of our business is the software platform. Without the software the model doesn’t work. The key part of the value is any one of our customers can use the platform and have access to any one of our providers."
Siebrecht said neither he nor the company's co-founders actually generated the vision for the company — instead, someone in the Seattle area came to him with the idea.
"It was based in how he had experienced the need for a different kind of warehousing, specifically something that was more flexible," Siebrecht told Supply Chain Dive. "The way he put it was, he was running a high-growth business that also had some seasonality, and when he was going from signing long term lease to long term lease. What he experienced was often too much or too little capacity as his business fluctuated. So his observation was, I've talked to a lot of business owners around here and they experience the same thing, but our needs offset each other. Is there an opportunity where we could leverage each other's capacity?"
Flexe meets an industry need that continues to grow
From there it was all downhill. Siebrecht talked to other businesses and discovered a widespread need, and thus launched Flexe. From the very beginning,Siebrecht knew creating a solid software base was extremely important, as he was a veteran of the software business (he was a founding board member of the SaaS-based provider EnergySavvy).
"We were able to build the very first software platform based on a real customer," he said. "It’s a pretty important attribute of a new company: if you can jump into operations fairly quickly, it can really help drive a better outcome with the software you develop."
As the company continues to grow, Siebrecht expects warehouse capacity to be more efficiently used, but he also expects other competitors to jump into the space and help on-demand warehousing really take off. He compared Flexe's success to the phenomenon of Amazon Web Services: Amazon was the first one to do it, curated it for on-demand purposes to fit individual business needs, and now everybody's doing it.
"We're seeing the same thing happening in warehousing," Siebrecht said. "We fully expect competitors to jump in and follow us. But it will require significant amounts of capital."
Flexe is just another example of the sharing economy and the benefits in can bring to both buyers and suppliers. While this is somewhat new in business-to-business circles, it's likely more platforms like Flexe will pop up as the e-commerce market continues to grow and warehouse space and space management becomes critically important to companies' bottom line. Flexe is still a pioneer in this area, but perhaps not for long.