The Need For More Warehouse Space and Solutions Expands In The UK as eCommerce Continues To Boom In 2021.
Warehouse Space Surges Post Brexit
While many people from the UK to the EU study the fallouts of a Coronavirus post-Brexit era, one fact remains: UK eCommerce is at an all-time high and will only get better. The new eco-system of warehouse management in a post-Brexit Covid era is rapidly developing.
According to Statista, in 2020, 87% of UK household made online purchases. Kooomo CEO Ciran Bollard has predicted UK ecommerce growth will explode, indicating that online retail spending in the UK will reach £75 billion by 2024. Now that more people are on the digital bandwagon, rising sales in 2021 have prompted companies to get more warehouse space. Retailers, 3pl’s, and other supply chains seek out more real estate from “last mile” delivery to big distribution centres. BNP Paribas Real Estate Research said warehouse space has increased by 73% since Covid.
“Covid 19 has accelerated pre-existing consumer trends and speeded up demand for online shopping at an incredible pace, resulting in a much greater need for warehouse space for retailers, supermarkets and third-party logistics providers. Changing consumer habits, along with uncertainty around the UK’s trading relationship with the EU, is likely to result in continued up-tick in demand as businesses may look at bringing supply chains closer to home.”
– Ben Wiley, BNP Paribas Real Estate
Meeting demand for eCommerce growth
The surge in online retail and distribution have garnered more investment and attention in the last year. Companies like Selazar are securing more financing to meet retailers’ growing space requirements as customer demand increases. Expanding warehouse operations is a high priority to meet the behemoth 2021 eCommerce markets needs and beyond.
Securing more investors is always a solution. Or rather, simply partnering with other companies and 3pl’s may be more beneficial options for e-tailers. As companies look ahead and plan long-term strategies for eCommerce growth, it makes sense to outsource warehousing operations to offer greater flexibility and lowers overall costs. Location is always a consideration as well.
3pl warehouses near motorways and major highways logistically have quicker access to customers and the markets. Not only can this help retailers expand their demographics, but their bottom line within and around the golden triangle.
The United Kingdom Warehousing Association just released a report that the vacancy rate for larger warehouses is 6.8% (only 2.2% inside the M25). The market is even tighter for food grade and temperature-controlled space. Just a decade ago, the national vacancy rate was 23%.
So, what does this mean for warehouse prices in the UK?
Impact of Brexit on UK warehousing
The company Knight Frank released an analysis finding that clearly outlines that it requires 1.36 million sq. ft of space for every billion pounds of online spend. By 2024 we could see an increase of 92 million sq. ft. Much of this growth is due to the grocery sector as well as online retail sales. Though the warehousing industry seems to be bouncing back more, UK supply chain companies will be competing for more for big commercial spaces as well as last-mile delivery.
The competitive landscape for space will most likely drive up costs with global industrial markets. As more products are being demanded online, more space will be required to fulfil the market. The spaces closer to significant transport areas with quick access to nearby concentrations of consumers will be the highest in demand.
Warehouse management system
To fully support and optimize warehousing and distribution functionality, it’s crucial to have the right warehouse management system. What is the new management system? Well, it’s not people. It’s technology. Specifically, it’s warehouse management software.
To engage successfully with inventory, fulfilment demands, returns, fully optimized and scalable automation software is needed. With all the Brexit changes, such as EORI numbers and custom declarations forms, having the right software helps to expedite a quicker process with little to no errors. If that information isn’t inputted prior and read accurately at the warehouse drop-off, this could cause more kinks in the supply chain delivery process.
Avoiding some of the most common 3pl logistics mistakes like slow or late shipments, poor inventory management, and errors in product details will create more success for your business and your customers.
You want to make sure your 3pl provider is doing this. Selazar currently has a 99.9% pick and pack accuracy rate because of its tech-first approach.
Should you use 3pl warehousing?
As many retailers and brands are learning, warehousing and distribution are very expensive and can be ineffective as a pricing model when you’re mainly in the business of developing products. Therefore, UK 3pl’s like Selazar are the next best solution. When you don’t have to worry about packaging, sending items, dealing with returns, you can focus more on the customer.
Customers want a friendly experience and an easy process. They want quick delivery. Freeing up your time to focus on customer service and creating the best products will create raving fans and repeat business.
3pl warehousing and Efficiency as a customer-focused model
The truth is, Covid has opened “Pandora’s box” of online shopping. Not only have more customers joined the home delivery revolution, but the demand for 24 hours and 48-hour delivery has increased. Without efficient systems to meet the needs of instant gratification, customers will begin to abandon ship increasingly. Managing warehouse inventory well is both our responsibility to our industry as well as our customers.
Good warehouse management means being more efficient. Responsible 3pl warehousing should be a tech-first approach for both space and time. Digital mapping and routing workers correctly around the warehouse matters when every second counts. Selazar makes this simple by digitally assigning the correct route for picking and packing, ensuring the most efficient use of time possible. Also, increasing the dispatch cut off time into the evening makes service better. This means customers who order by 7 pm can still get same day dispatch. This is why Selazar has received a 2021 award nomination for “Warehouse Efficiency” by the Logistics Awards. Warehouse management has been a focal point for the company.
We live in an evolving world. Ensure that you have the right strategy, warehouse management, and partners to grow into the eCommerce market through 2021, and beyond.
Selazar has partnered with some of the biggest and best brands in the UK and EU. We offer the best eCommerce solutions for companies in an evolving online marketplace.