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By Henry Uche
Mr Ayo Olunuga is a logistics professional who has plied his trade across Nigeria and the West African subregion.
He recently spoke to Daily Sun on the chnaging dynamics of On demand warehousing practice and how it can benefit businesses and entreprenuers across the country. He listed some of these benefits to include cost optimisation, improved efficiency and effcetive allocation of financial and human resources to achieve set organisational goal, among others
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Origin of On demand warehousing concepts
Within the subregion the logistics and warehousing sub-sector in particular, one business that has generally operated in a very traditional way, change appears to be inevitable.
From automation for improved efficiency to technological advances in warehouse management, order and inventory management, the change is fast spreading to the warehousing subsector, leading to the rise of on-demand warehousing.
Perhaps, unknown to many observers, the idea of on-demand warehousing has been gathering momentum for a couple of years, having gained global acceptance by providing businesses with flexible storage solution and optimising supply chain operations.
Over these years, the demand for on-demand warehousing has also spurred the growth of various key players worldwide.
Companies like Flexe and Flowspace in the United States, Stowga in the United Kingdom, and Stockarea in India, have emerged as key players in the within the on-demand warehousing space and have established themselves as the leaders in that space. These platforms connect businesses with a network of warehouses, providing seamless access to storage space and advanced inventory management solutions.
On-demand warehousing is providing a serious challenge to the traditional models of long-term warehousing contracts and in-house fulfilment.
Already, Nigeria, as a vibrant global market has embraced this warehousing model and the rise of on-demand warehousing, presents both challenges and opportunities for logistics players in the country.
What is On-demand Warehousing?
On-demand warehousing refers to the provision of temporary storage space on a flexible basis, allowing businesses to respond to dynamic market demands. Instead of committing to long-term leases, companies can access warehousing facilities as needed, reducing costs. This model offers increased agility, scalability, and cost efficiency, making it an attractive option for businesses across various industries to optimize their supply chain operations and respond effectively to market fluctuations.
Within the on-demand space in Nigeria, these platforms work on 2 models.
First, on-demand warehousing platforms provide a fully managed service. These platforms own their warehouses and act like a traditional warehousing partner but charge on a pay-as-you-go basis for the services rendered. With the aid of technology these platforms provide the much-needed visibility of inventory and manage inventory across various locations. These platforms offer a suite of services not limited to offloading of inbound items, inventory management, storage, and fulfilment. Some of these platforms also offer last mile delivery services for the shippers as well.
The other model within the on-demand space is the brokerage model where the platform connects shippers with warehouses of their choice. Shippers make enquiry via the platform’s website to discuss requirements in detail if necessary.
As above, on-demand warehousing is a very broad term covering both brokerage services as well as managed flexible solutions. Ultimately, on-demand warehousing refers to the ability to access warehousing services as and when required without the need for long term commitments.
Major Players in Nigeria
In Nigeria, several key players have emerged as pioneers in the on-demand warehousing space, catering to the diverse needs of businesses. One such notable player Instant Warehouse, offering a tech-driven platform that connected businesses with available warehouse space in real-time. Their network of warehouses spanned across major cities in Nigeria, provided companies with flexibility and access to quality storage facilities on-demand.
Another prominent player is Renda, which focuses on providing end-to-end logistics solutions, including on-demand warehousing services and fulfilment. Their platform offers advanced features such as real-time tracking, inventory management, and seamless integration with other logistics operations, enabling businesses to optimize their supply chain activities efficiently.
Several other players have also emerged in this space operating within the two models. They include, Loft, Dryva Logistics, Haul247, SHiiP to mention a few.
Why Nigerian businesses need on-demand warehousing
The need for on-demand warehousing is two-fold, demand for flexible warehousing and supply of overcapacity. On the demand angle, there is the requirement from businesses that require flexible warehouse space to manage seasonal spikes in storage requirements, while on the supply side, there is the seasonal availability of excess capacity from warehouse asset owners.
A major factor for the rise in demand for on-demand warehousing is E-Commerce.
In recent years, there has been a steep increase in E-commerce activities with retailers looking to expand their product ranges and fulfilment capabilities. This demand comes with a requirement for extra warehouse space that just cannot be met with the same timescales or required.
An uptick in the social commerce space has also contributed to the rise in on-demand warehousing as most social commerce businesses do not have the financial firepower to operate in the traditional warehousing model.
On the supply hand, there are well-established retailers, importers and manufacturers that have warehouses big enough to meet seasonal demand or unpredicted spikes but have excess capacity at other times. During these low-season periods where the warehouses are under-utilized, the on-demand platforms can match demand for warehouse space to the available warehouse space to enable the well-established businesses monetise their underutilised assets.
It was this disconnect that made the need for on-demand warehousing so apparent. The ability to optimise the underutilised space and offer a flexible, short-term fix for those retailers needing the extra space.
Drivers for on-demand Warehousing in Nigeria
Flexibility and Scalability: Nigerian businesses, particularly those in dynamic industries such as e-commerce and retail, require flexible storage solutions that can adapt to fluctuating demand.
For suc companies, On-demand warehousing offers them the unique ability to quickly scale up or down, allowing them to efficiently manage inventory levels and minimise costs of doing business.
Cost Optimisation : Traditional long-term leases often come with significant upfront costs and commitments. But On-demand warehousing eliminates these financial burdens, by allowing businesses to allocate resources more efficiently to optimise their budget. This cost optimisation enables businesses to invest in other critical areas of growth.
Technological Advancements: The increasing adoption of digital technologies in Nigeria has facilitated the growth of on-demand warehousing. Digital platforms enable seamless connectivity between businesses and warehouse providers, enhancing transparency, real-time tracking, and inventory management capabilities.
Suite of Solutions: On-demand warehousing provides the opportunity for suppliers to provide additional suite of solutions to customers as can be seen with the likes of Renda, which aside from flexible warehousing solutions, provide services such as devanning, inventory management, fulfilment, last mile delivery and cash collection. These added services would have had to be provided by the retailer in a traditional warehousing model.
Market Entry and Expansion: For businesses looking to enter or expand in the Nigerian market, on-demand warehousing offers a cost-effective solution. It allows companies to establish a local presence quickly, test the market and scale their operations as needed, without the burden of long-term commitments.
Challenges of On-Demand Warehousing in Nigeria
Although the rise of this warehousing scheme presents promising opportunities, it also comes with its fair share of challenges. In Nigeria, some of the key challenges include: Inadequate infrastructure, lack of standardised warehousing facilities, varying warehouse quality, as reliable road networks are crucial for seamless warehousing operations.
Addressing infrastructure gaps will be vital to ensure the success of on-demand warehousing in Nigeria.
According to research by notable property firm, Knight Frank, there is a significant deficit of in purpose built warehousing facilities in Lagos state where demand stands at 1 million sqm while supply is a mere 300,000 sqm.
Developers such as Agility are stepping in to fill this gap by developing purpose-built warehouses.
Technological Adoption: Embracing advanced technologies and integrating them into warehousing operations can pose a challenge in a market where digitalisation may still be evolving. Encouraging technological adoption and providing training and support to logistics providers will be essential.
Culture: On-demand warehousing also face a cultural issue. Nigerian by far still hold on to the dated practice of sole occupation of warehouses despite the advantages of shared spaces. With the rise of on-demand warehousing, businesses are getting a better understanding the advantages of shared warehouses and reaping the benefits.
Opportunities for On-Demand Warehousing
Despite the challenges, on-demand warehousing presents several opportunities for logistics players in Nigeria. The country’s growing e-commerce sector, coupled with the rapid expansion of retail and manufacturing industries, has led to an increased demand for efficient storage and order fulfilment. On-demand warehousing platforms can tap into this demand by offering customized solutions that cater to the specific needs of businesses. By leveraging technology, these platforms can streamline inventory management, reduce operational costs, and enhance overall supply chain efficiency.
Furthermore, on-demand warehousing fosters collaboration and resource optimization within the logistics ecosystem. By maximizing warehouse utilization and enabling shared spaces, on-demand warehousing platforms can encourage partnerships between logistics providers, manufacturers, and retailers. Such collaborations can lead to enhanced economies of scale, reduced wastage, and improved resource allocation, benefiting all stakeholders involved.
In concluding one can say that the rise of on-demand warehousing has brought a shift to the logistics industry globally and Nigeria is no exception.
With major players like Renda and Dryva Logistics leading the way, businesses in Nigeria now have access to flexible, cost-efficient warehousing solutions. While challenges related to infrastructure and technological adoption persist, the opportunities for increased flexibility, scalability, and cost optimisation cannot be ignored.
As the logistics industry in Nigeria continues to evolve, on-demand warehousing is poised to play a crucial role in driving efficiency and competitiveness. By embracing this innovative model and addressing the associated challenges, logistics players in Nigeria can unlock new avenues for growth and enhance customer satisfaction.
