6 March 2023 The last decade has been characterized by significant technological advancements that have influenced various areas of society, including consumer habits and the relationship between companies and customers. In Italy, over the past two years, in the face of the Covid-19 crisis, we have witnessed an event that brought new opportunities to the market. Although it was a challenging period marked by uncertainty, it was also a positive year for the consolidation and maturation of e-commerce in the country. According to data collected by the intelligence company T.Group and those provided by Neotrust, more than 20 million new consumers entered e-commerce in 2020 and remained active in 2021. The choice of online shopping is already a reality in Italy, and many companies are preparing to offer consumers new forms and user experiences, either by increasing product diversity on websites, expanding their reach on market tools, and/or offering new omnichannel strategies. With the market changing at record speeds, new challenges arise for companies. One of these is the efficiency, quality, and speed of product shipping. Order delivery is not only a recurring request from consumers but also a decisive factor at the time of purchase. Delivery times and the way the product reaches the customer are among the most discussed topics by the main market players. Today, it is possible to make deliveries in less than 24 hours, but how is it done? Companies like Amazon have increasingly invested in logistics centers known as “urban warehouses”. As the name suggests, these are warehouses installed in urban centers or near stores and/or customers to reduce distances and ensure deliveries in the shortest possible time. These new formats have proven essential for companies aiming to adapt to new market demands. But, after all, how do warehouses contribute to the success of your company’s supply chain? In this article, we will address their main characteristics and the advantages they offer. Check out the topics below. Urban Warehouses and Their Main Characteristics Urban warehouses are logistics centers located within urban centers, near large cities, or even close to physical stores. Their purpose is to store, sort orders, and distribute products quickly and efficiently. In other words, they are initiatives aimed at completing fulfillment with maximum agility and precision. Urban warehouses are now considered a fundamental structure for the smooth operation and growth of e-commerce. They can be designed as dark stores or micro-fulfillment centers. Managing and coordinating e-commerce logistics requires, from managers, not only technical knowledge but also a strategic ability to design fast and efficient processes. Some of the requirements for excellent management within these warehouses are: high inventory accuracy, agile and precise picking, reduced transportation costs, intelligent delivery routes, and increasingly rapid reverse policy management. Despite being associated with e-commerce, urban warehouses can be applied to numerous companies, such as the pharmaceutical and food industries, which require high performance due to strong demand. All the above-mentioned characteristics make urban warehouses the key element that allows companies to become competitive in the market, meeting new consumer demands. Most traditional warehouses struggle to keep up with consumption changes in a timely manner, falling behind in positioning compared to other companies in the same niche, especially large operators. And the truth is that those who are not open to innovation can really lose significant space in the market. Today, for example, delivery delays are no longer just a situation that generates negative comments on review sites. It is a factor that can lead to the abandonment of a purchase. If one company delivers a product in 5 days and another offers the same item within just 24 hours, it is very likely that the customer will choose the latter without much thought. In this sense, one of the fundamental strategies to ensure competitiveness, delivering in record times, is to be physically close to this customer. Hence the crucial role of urban warehouses. Competitive Advantages of Urban Warehouses You might be wondering: “In practice, what advantages will my company have if it considers the application of urban warehouses as a logistics strategy? Is it really worth investing?” Discover some of the main advantages offered below: 1. Delivery Speed As we highlighted earlier, consumers increasingly consider delivery speed a decisive factor when placing an order, especially when it comes to e-commerce. With this scenario in mind, companies are already investing in competitive advantages such as, for example, same-day delivery, which is the possibility of delivery in less than 24 hours. This trend started in the United States, with the company Amazon, in 2012, and soon became popular among numerous North American companies, reaching Brazil as well. Urban warehouses allow for one-day deliveries, as they are located and managed at strategic points in cities, always aiming to reduce distances and achieve the best shipping routes. Additionally, it is possible to make multiple deliveries on the same day in a short period of time. The result is bidirectional benefits, both for the company and the consumer. âś”Main advantages for the consumer: the main advantage is the satisfaction with the speed of receipt, after all, one of the characteristics of every buyer, regardless of the niche, is the anxiety for the product’s arrival. Additionally, your company starts being considered in other situations by consumers, who trust your brand for urgent purchases and require fast delivery times. âś”Main advantages for the company: customer loyalty, increased market reputation, and, consequently, recognition through its differentiators. As the market becomes increasingly competitive, being remembered as a brand that enables excellent shopping experiences makes your company a successful business. 2. Proximity to Customers Are you where your customer is? This question may seem obvious, but a point to consider when investing in urban warehouses is precisely the location based on your target audience. As mentioned in the previous point, urban warehouses located in urban areas tend to have excellent delivery speed, however, it is necessary to ensure that these areas are close to the main consumer. It is still possible to identify large traditional warehouses in rural areas or far from urban centers, which can affect delivery logistics if the issue is speed. So, before applying urban warehouses to your company, consider: âś”Conduct market research; âś”Identify where your target audience is, or the one that represents the highest percentage of sales. âś”Identify route flexibility and whether it is possible to increase the delivery speed of your products. 3. Proximity to Physical Stores Another advantage that can be observed when opting for urban warehouses is the proximity to physical stores, which have also had to adapt to the new consumer market, as omnichannel strategies have strengthened in recent years. Omnichannel is nothing more than a new consumption experience where different purchasing channels (online and offline) are interconnected, meaning it is possible to make a purchase through the site and pick it up in-store, or vice versa, make a purchase from the physical seller and receive the products at home. Regardless of the scenario in which the purchase is made, the proximity of urban warehouses to physical stores allows products to be quickly available for in-store pickup, and it is also possible to ship the product to the customer’s home with the same efficiency. 4. Supplier Flexibility Once located near urban centers, it is possible to have greater flexibility in hiring suppliers and transport companies. In general, large transport companies do not have versatility in price negotiation, which is often passed on to customers in the form of freight. However, if the shipping price is high compared to the competition, the consumer may be dissatisfied and have a negative experience with the brand. In this sense, a positive point of urban warehouses is the possibility of finding extended delivery services, such as on-demand and third-party applications that reduce delivery costs, making the service cheaper for companies and customers. 5. Agility in Reverse Logistics How is reverse logistics performed in your company today? How long does it take to return a product to your warehouse? These questions are part of the consumer’s shopping experience, so it is necessary to ensure that, in practice, the transportation of products in case of return is fast and accurate. Returns, in general, cause high costs for companies with distributors and transport companies, because the impact goes beyond rework, as well as additional expenses for fuel, operators, and even the loss of goods. And if all these logistical problems weren’t enough, a return can interfere with the customer’s relationship with the company, generating a negative experience. In this way, the accounts are simple: when your warehouse is located in urban spaces, additional expenses are lower because trips can be easily reduced, generating greater savings for the process. Additionally, it is possible to provide quick feedback to the customer by exchanging products or returning them, increasing their trust in the brand and strengthening the relationship with your company. 6. Better Omnichannel Shopping Experience According to research conducted by Google, customers immersed in omnichannel have a 30% higher LTV than single-channel consumers. This indicates that companies that have the ability to integrate their sales channels have a greater chance of responding to their consumers’ inquiries and converting them into new sales. Urban warehouses help with the omnichannel model, as they bring inventory closer to the consumer and the main physical retail points. In this way, it is possible to increase sales, allowing consumers to move between channels and, most importantly, to have a unified experience across all of them. Whether buying directly on the site, purchasing the product online and picking it up in-store, or ordering in-store and receiving it at home, the customer will have the product in their hands as quickly as possible. How to Design and Manage an Urban Warehouse Now that you know a bit more about the advantages offered by urban warehouses, it is time to keep an eye on the logistics of planning and managing this intralogistics model. Urban warehouses function as temporary product storage, meaning they are spaces that receive products from distribution centers available for immediate shipment to end consumers. In general, urban warehouses operate with fractional items to facilitate and speed up separation, as well as the closing of an order. Therefore, to ensure maximum stock organization and picking process, it is highly recommended to use management systems such as WMS and OMS. In many warehouses, this software is integrated with automatic order picking assistance systems, such as voice picking or pick-to-light, which make the employee’s work even easier, indicating step by step the process to perform a certain task and leaving the operational process faster and more accurate. Many urban warehouses have to handle a high number of orders and the pressure of delivery times, so investing in management systems integrated with automatic systems has been the best way to ensure high performance and the achievement of all objectives. Follow Market Developments Now that you, the logistics manager, know everything about how urban warehouses work, it is time to follow market developments and choose the right partner on the path to development, competitiveness, and market reach. Here at Deagor, you will find the best warehouse management systems capable of optimizing your processes and accelerating your results and profitability. Our OMS offers ideal functionalities for managing urban warehouses, ensuring maximum agility in picking and total precision in fulfilling all orders, as well as real-time monitorable data. Centralize your information, reduce costs, organize the order cycle, eliminate any manual errors within urban warehouses, offer your end customer the best service, and be a recognized company in your niche. Talk to one of our experts, get answers to your main questions, and prepare for new market demands! Urban Warehouses: The Key to Optimizing Order Fulfillment Operations Deagor WMS per ecommerce può aiutarti!