Business Case Studies

How To Turnaround A Failing Warehouse Business

There is over 2.1 billion square feet of warehousing space in the United Kingdom. According to a Stowga report, this is worth £10.5 billion in annual rent. Given the perennial need to stock and distribute goods, it may not be entirely clear how and why a warehouse business can turn south.

But there are several reasons why warehouses fail. The first and foremost reason is the way most warehouses are organized. Unlike the top retail brands like Tesco and Sainsbury’s, most small and medium sized businesses choose to go for shared warehouses.

Here, a business shares the warehouse with other businesses and rentals are mostly based on the leased square foot. From a client’s perspective, this is profitable since they only pay for the area occupied. This enables them to scale up warehousing during peak seasons and scale down during lean times.

For the warehouse owner however, this presents a challenge since it is not always possible to ensure full occupancy on your warehousing space. At the same time, the costs incurred in operations are based on total occupancy and are hence fixed. In the absence of a clear cash flow cycle, warehouses can quickly turn red.

If you are a warehouse owner with a failing business, here are a few tips to help you turn your operations around.

Automate

Human labor costs money and the first step in making your business profitable is to reduce recurring outgoing expenses, including human labor. While we are still some years away from using bots at scale to load and unload goods, you may however use warehouse management software applications that can help you automate data entry, invoicing and tracking good movement. Doing so not only helps you reduce labor costs, but also reduce errors and improve customer experience since your clients do not have to run through red tape while stocking or unstocking goods.

If you are a small warehouse with just a few thousand square feet of space and only handle a client or two, then you may look at other cheaper ways to digitize your operations in order to bring down errors. For instance, you could look at MS Excel for managing inventory while using mobile apps like WhatsApp to coordinate truck movement and communication among various stakeholders like the client, the transport agency and your staff.

Improve visibility

Automation is a good when you already have a thriving business that needs streamlining. You may need to do more if you are a new entrant to the business or do not have a large clientele to lean on. Improving visibility and marketing your business is a very necessary component of your business.

At the outset, marketing may appear to be a futile strategy for warehousing. Businesses do not choose warehouses based on brand recall or season discounts. There are also dozens of other considerations that go into the decision making process. A sales focused approach may be more beneficial from this perspective.

There are however two reasons why marketing is quite important. Building a brand establishes a clear differentiator between your business and those run by competitors. When in doubt, customers tend to choose a brand they are more familiar with and marketing helps your prospective customers familiarize with your offering.

More importantly, a business with better branding can afford to charge a premium on their offering. Customers are generally okay with paying more for a brand that is known for its reliability and trustworthiness.

So how do you go about building a brand for a B2B business like warehousing? The first step in this process is to establish a business name that is memorable and relatable. Brand names like Warehouseio and Warehousefox establish a better brand recall than ‘ABC Warehouse and Logistics Ltd’. While picking a brand name, also make sure that the domain name is available since that will come in handy while advertising your business.

Most businesses today do not use YellowPages or Craigslist to find warehouse spaces for their goods. Instead, they choose to look up Google and navigate to the top listed spaces. This presents an opportunity for new warehouses since making use of the right keywords and content can help you beat competition and secure your client.

Invest in content marketing techniques to target the various keyword combinations that a prospective client is likely to search for. For instance, if you own a warehouse in Brooklyn, you could write comprehensive articles on topics like “what is the average cost of a warehouse in Brixton” or “where is Tesco’s warehouse in Chelsea” – these are questions that a client looks up in their research phase. By publishing content on these topics, you can create visibility and also capture their credentials. This allows you to create retargeting ad campaigns to promote your warehousing space.

Add value

Depending on your geography, clients can be pretty price-sensitive. A highly competitive market contributes to price wars and is often a race to the bottom. While branding is one way to increase margins, you may also look at adding value to your offering in order to charge higher from your clients. For instance, you may offer transport and distribution facilities to your clients so that they do not have to handle logistics to and from the warehouse. You may install cold-storage modules so that a client with need for both cold chain and warm chains may prefer your warehouse over other dedicated warehouses. The bottom line here is to identify challenges in the supply chain and help fix them for your client.

Warehouse management is like any other business. The tips provided here help businesses reduce operational inefficiencies and fix pricing challenges and this is critical to turnaround a failing business.