What is On-Demand Warehousing?

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On-demand warehousing connects warehouses with excess space to businesses in need of inventory storage and order fulfillment on a temporary basis. 

On-demand warehousing allows customers the flexibility needed to run businesses when budgets are limited and demand can vary. Trying to decide if this is the best option for your business? We have everything you need to know before making a decision. Let’s get started.  

On-demand warehousing: How it works

On-demand warehousing can support your business in a variety of ways, but the three most common are inventory overflow, retail distribution, and e-commerce fulfillment. 

Inventory overflow

For businesses that experience seasonal peaks or unexpected influxes of inventory, on-demand warehousing can add additional capacity as it’s needed in a timely manner. 

Retail distribution

For businesses that send their products to retailers, on-demand warehousing reduces the inventory storage fees at the retailer as well as allows businesses to store their inventory closer to the retail intake centers. 

E-commerce fulfillment

For businesses that sell their products online, on-demand warehousing allows them to shorten their delivery times, launch short-term product promotions, and test out new markets by utilizing the warehouses and fulfillment networks that are already available in needed areas. 

Increasing demand for on-demand warehousing

There are four key influencers that are increasing the demand for on-demand warehousing: A lack of warehouse space, the popularity of e-commerce, speed, and flexibility. The lack of warehouse space in the U.S. has sent companies looking for temporary solutions for their businesses - like on-demand warehousing. As e-commerce is becoming more popular every month, the need for warehouse space is also increasing, but with a limited supply of warehousing, companies have also turned to solutions like on-demand warehousing. Another major cause of this increasing demand is the ability of same-day shipping that on-demand warehousing offers. This is because companies can source empty warehouse space near their customer bases across the U.S. and cover the last mile of delivery. Lastly, on-demand warehousing is becoming more popular due to the flexibility it offers. Since there are no commitments with on-demand warehousing, companies can use the space temporarily to fulfill seasonal demand, sale demands, etc. 

Other inventory storing options

Along with on-demand warehousing, there are several other options that businesses can use to store and fulfill inventory. 

Third-party logistics provider (3PL)

These businesses provide one or more logistics services including contract warehousing, multi-client warehousing, transportation management, inventory management, distribution management, and freight consolidation.  

Third-party fulfillment company

A company that offers inventory storage, order picking and packing, and the logistics of shipping your orders directly to your customers.  

Lease/purchase a warehouse

This would give your company the opportunity to store your product in your own space and staff the warehouse with your employees to offer in-house distribution solutions.