There is enormous demand for warehouse space, but very little supply.
Developers are furiously trying to build warehouses. Yet at the same time existing warehouses are not full.
There is a huge amount of empty space available that could be used if only there was a way for tenants to advertise it and businesses to find it.
Stowga is an online marketplace to connect businesses who need space with warehouses with spare space available.
The problem lies with the long-term leases that are characteristic of the industry. We are going to use technology to solve that problem and build a short-term, pay-as-you-go warehouse market that optimises warehouse utilisation. Warehouses earn more and businesses pay less by only paying for the space they use.
We are re-designing and rebooting the whole system, drastically and demonstrably improving the sector, for both owners and occupiers of warehouses.
Long term Vs Short-term needs
To understand the inefficiency of the current system you have to understand what drives both sides of the market.
Warehouses derive their value from the predictability of the income they bring in. Landlords want long-term predictability so they demand long term leases. However, for a business that needs warehousing services, the problem is how much space to commit to in the long-term?
When you take on a warehouse you make assumptions about the future. The amount of space you need is dependent on how much inventory you think you’ll have. The inventory you think you’ll have is based on projected sales - and sales forecasting is a notoriously tricky business. The further out the forecast, the less likely it is to be correct - and so you can never really know what you’re going to need.
As a result, it is a highly unsatisfactory and inefficient system. Warehouses tend to be either over-packed or half empty.
At the core of the warehousing market there is a fundamental mismatch between the landlords who want fixed, long-term leases, while businesses that need warehousing increasingly require fast-moving, dynamic and flexible solutions.
Even a relatively predictable businesses is going to have some periods that will be busier than others - seasonal changes quarter to quarter. So in a perfect world the solution needs to react immediately, expanding or shrinking in-line with the needs of the customers. A solution that optimises warehouse capacity as well as the means by which goods move through them.
Stowga
Typically, in an open market, if there is demand for something and someone’s willing to pay for it, then someone will find a way of servicing that demand. The question for us is will there be a demand for short-term warehousing?
We are betting there will be.
In the world of property we have seen it in retail with pop-up shops and shop-shares. We have seen it in offices with serviced offices and co-working spaces. We even see it in the residential space with AirBnB. It is inevitable because it is more efficient for both parties - owners and operators increase yields and those who use the space reduce their costs.
The underlying economics and the increasing speed of business means that short-term, pay-as-you-go warehousing simply makes sense.
We are launching in July 2016. If you want to know more or would like to get involved or give feedback please get in touch.
