Industry Talk

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

How can warehouses acquire customers?

Warehouses are constantly searching for new customers, as the nature of their business requirements continues to evolve and the demand for warehousing in the UK has grown considerably over the past five years. Over the last 8 years, vacancy rates have decreased from around 10% to below 5%, according to CoStar. And one billion square foot of new warehousing space has been built globally over the last decade, according to CBRE. This growth can primarily be attributed to the rise of e-commerce, and for every 1 billion pounds spent online, an additional 1 million square foot of warehousing is needed to service that demand. The increase in demand driven by e-commerce, means that it makes sense for warehouse operators to acquire customers through digital channels especially since this has become the norm for customers looking for warehousing solutions.

Traditional warehouses are therefore being replaced by a new wave of fulfilment centres. But to stand out from the competition, warehouses must not only offer quality services but they must also be open to adopting new and innovative methods in an effort to acquire customers.

The current landscape 
Logistics has been dominated by human relationships for decades, where agents/brokers and customer referrals have been a large part of the industry’s success. Customer referrals are still an important part of warehouse customer acquisition, given the additional credibility of a referral from an existing customer alongside newspapers and print media. However, there has been a significant decline in newspaper readership, despite transferring print media content online. According to the BBC newspaper circulation figures have declined up to 28% since 2013, and these figures are predicted to decline further in the next few years. This illustrates how traditional media methods are not getting warehouse operators/logistics companies in front of the correct audiences for successful customer acquisition. Agents/brokers have traditionally been used by logistics companies to acquire customers, but how do customers know if they are getting the best deal?

So, how can warehouses use digital tools to acquire new customers? 
Warehouse operators are increasingly using email marketing campaigns and Linkedin email campaigns in an effort to acquire customers. This includes deploying ‘push’ and ‘pull’ marketing strategies and creating tailored content to engage target customers. Search engine marketing tools have also become increasingly popular, for example, Google analytics provides insightful data metrics on the number of clicks, and visits to company’s website, and other detailed metrics related to customer engagement.

Most warehouses today have a company website, however, warehouse operators require a certain amount of brand awareness to drive customer traffic to their websites to generate a sufficient number of enquiries. Most companies need to hire a marketing resource, in addition paying for adverts across various digital marketing channels, both of which are costly and have an unknown return of investment. Not all warehouses can afford to spend thousands or millions of pounds per year on marketing, and there is not a ‘one size fits all solution’. This presents a high risk for warehouses, a risk not all logistics companies can afford to make.

On demand warehousing 
Today there are large numbers of retailers with spare warehouse space – so it is time for warehouses to utilise that space, provide some essential income and provide other retailers with access to warehouse facilities. The key is to make that process fast and flexible; to move away from long drawn out searches and complex negotiations to fast demand matching and price transparency.

Cue on demand warehousing. This innovative new solution is revolutionising the way in which retailers consider warehousing space. Essentially, the service matches a retailer’s demands to available spare space and, from size to location and duration, the entire process is totally flexible – a retailer can commit to as little as one month and payment is on demand, on a ‘pay as you go’ basis. In addition to storage, this on demand model also provides access to a raft of other warehousing services, including the movement of inventory, which can also be scaled up and down as required.

This approach transforms the speed with which a warehouse can acquire new customers. Rather than the torturous year spent locating and negotiating a new lease, a retailer can actually locate, secure and move into a warehouse in just one week. By setting a minimum and maximum requirement, a retailer can then scale up and down the amount of space – and supporting logistics services – as required, in response to seasonality, customer demand or other factors such as Brexit. A win-win for warehouses across the country.

Marketing is expensive and is an unknown return on investment. As more and more people go online to search, access and buy goods or services; businesses have to have an online presence if they are to compete in the new digital economy. Digital marketing requires a niche skill set and so unless you are prepared to build that expertise in-house, it makes sense to leverage a marketplace designed to aggregate supply and demand. An online marketplace that is a free marketing channel. There is absolutely no downside.

There has to be a behavioural shift in the methods warehouses use to acquire customers, and the competition within the industry is fierce. The demand driven by e-commerce retailers means the effectiveness of traditional marketing methods used to acquire customers once upon a time has diminished and become less effective. Digital channels are effective, but they are expensive to use, and not all logistics companies can afford to dedicate significant amounts of money on a marketing budget. It makes much more sense to use a platform with one sole purpose – to match customers with warehouses.