On-demand Warehousing 101: Top 10 Locations for Warehousing & eCommerce Fulfillment
Key Takeaways
- The top 10+ warehousing and fulfillment locations and why
- How on-demand warehousing opens up capacity in those competitive markets
- High-level costs of on-demand warehousing
In this installment of our On-Demand Warehousing 101 series, we take a look at the most popular and strategic locations to have warehousing and fulfillment centers.
For an even deeper dive, and our full marketplace pricing and trends data, download The 2019 State of On-Demand Warehousing whitepaper. And if you haven’t already, be sure to check out blogs one and two in the On-Demand Warehousing 101 series: “What is On-Demand Warehousing?“, and “7 Supply Chain Challenges Solved with On-Demand Warehousing.”
Top 10+ warehousing and fulfillment locations
The most popular locations for warehousing and fulfillment, in alphabetical order:
- Allentown, Pennsylvania
- Atlanta, Georgia
- Chicago, Illinois
- Dallas, Texas
- Denver, Colorado
- Detroit, Michigan
- Edison, New Jersey
- Indianapolis, Indiana
- Los Angeles, California
- Orlando, Florida
- Phoenix, Arizona
- San Bernardino, California
- San Francisco / Bay Area, California
- Seattle / Tacoma, Washington
These cities and regions are in high demand for several reasons:
- Proximity to transportation hubs, like airports, seaports, and major highways
- Highest population density
- Fastest-growing population
- Centralized proximity to urban populations
- Proximity to major manufacturing hubs
- Net absorption exceeding completion rates
It’s not an overstatement to say that eCommerce and omnichannel retail have changed logistics operations forever.
Twenty years ago, it made absolute sense to rent or buy industrial space in more affordable regions because the last mile of transportation was shipping bulk pallets to stores. Having a fixed set of capacity in the midwest was a safe bet. Not anymore.
Today, retailers and brands must be more dynamic. Instead of having that fixed network of warehouses located farther away, businesses must concentrate on getting inventory as close to end consumers as possible. The result is a decentralized network that can serve urban areas more quickly.
Most popular locations for on-demand warehousing and fulfillment locations
In the State of On-Demand Warehousing whitepaper, we looked at the top 5 fastest-growing industrial rental markets from Prologis and also the states and regions that have the highest demand for on-demand warehousing and fulfillment services.
If we compare the top 10 warehousing and fulfillment list to fastest-growing industrial real estate markets, there’s a clear parallel.
Available capacity in any region
Optimizing for the last mile of delivery requires a solution that can get you into even the tightest of real estate markets. Flexe Logistics Programs make that possible because it relies on a network of warehouses providers that have opted into our network. These providers, ranging from 1PLs to 3PLs, aren’t publicly listing their available capacity in the market, enabling FLEXE customers to tap into a massive network of storage and fulfilment capacity and services.
Though our marketplace data continually evolves, if we look at Flexe requests by region and also the percentage of provider in each respective region, you can see the capacity is there.
Looking at California, two major metros are in the top 10 list for warehousing and fulfillment and also the top five list for fastest-growing markets for industrial real estate. At Flexe, most of our requests for on-demand warehousing and fulfillment are in California and the Southwest region of the U.S., and it’s also where we have the most available share of Flexe warehouse providers.
How much does on-demand warehousing cost?
Pricing for on-demand warehousing depends on a number of factors such as pallet position, warehouse location, time of year, and scope of project. Every warehouse provider in the Flexe Logistics Network sets their own prices with guidance on how to price competitively when bidding on Flexe projects.
At Flexe, because our network is comprised of unaffiliated warehouse providers, we standardize operations in two main ways:
- Every warehouse provider uses the Flexe Logistics Platform when working with our customers, which centralizes inventory and order management, shipment data, and billing
- Projects are priced on a per-pallet and service-level basis to standardize the cost structure for both our warehouse providers and our customers
Pallet position
For pallet storage, there are three positions: Stack, rack, and floor.
- Stack: In stacked storage, the pallets are stacked on top of each other. This is the most cost-effective storage option.
- Rack: Many warehouses have rack storage systems and software that make their storage space highly efficient. Rack storage often enables providers to store a higher volume of pallets.
- Floor: Pallet storage on the floor allows inventory to be more accessible, floor space is usually the most expensive of the three and may be required for large items like mattresses and furniture.
*The above pricing is for storage fees only. Those using Flexe Fulfillment, pricing is based on the number of units picked plus additional storage fees, and is billed at the cost-per-unit level.
Time of year
In the above table, you can see that most pallet prices peak in Q3 and start to recede in Q4. The spike in pricing accounts for the number of Flexe customers stocking up on inventory to prepare for the Q4 holiday season. In Q4, they drop and remain steadily lower throughout Q1 and Q2.
Project scope
Fully burdened pricing depends a lot on the type of project for which you need on-demand warehousing. For inventory storage and retail distribution, costs center around labor (inbound/outbound shipments) and pallet storage. For eCommerce fulfillment projects, costs include labor, storage, and pick-and-pack services.
Meeting customer expectations in a tight real-estate market
For retailers and brands, meeting, or even coming close to meeting, new delivery standards like two-day, one-day, and same-day comes down to the last mile of delivery. In order to deliver faster, and keep costs down by lowering your cost-per-order, goods need to be stored close to their end customer.
On-demand warehousing and fulfillment enables retailers and brands to find available capacity, even in the most in-demand markets. You can quickly pop-up fulfillment centers, without being locked into fixed, long-term contracts, or incurring steep implementation costs.
