Do people still buy from people?

THE OLD adage that “people buy from people” simply does not stand up to modern scrutiny. When a commercial exchange is commoditised, the process (including the right of redress) is simplified and the choice is easy to navigate, it turns out that people love automated procurement! Ebay (1995) TripAdvisor (2000) AirBnB (2008) and Uber (2010) demonstrate the phenomenon. These decentralised models of trading all rely on digital literacy, the ubiquity of handheld user platforms (currently the mobile phone app) and sophisticated algorithms for marketing. 

Historically, 3PL business development has been a dark art with shady deals struck in smoke-filled rooms or on the golf courses, but this is already changing and some analysts predict that On Demand Warehouse (ODW) could altogether dispense with the need for long-term contracts and replace contract logistics with the ‘pallet hotel’, a concept pioneered in Seattle in 2013.

But the truth of ‘people buy from people’ is that we need social proof in order to buy confidently. Trust signals, badges, and activity notifications are essential to the contemporary platforms mentioned above, so maybe UKWA will host the ‘TripAdvisor’ of warehousing where buyers and sellers receive ratings to help new market participants build trust.

Property investors will need to reevaluate their return-on-investment metrics as occupiers become more transient. Simultaneously, these occupiers must adapt by developing new models to assess the productivity of warehouse space. AI will play a crucial role in providing accurate forecasts to verify the true availability of space. However, warehousing encompasses more than just storage; it includes the delivery of value-added services as well.

3PL providers must refine their systems to ask the right questions regarding resource allocation and pricing. They also need to establish a balance in data sharing with clients, ensuring enough information is exchanged while maintaining security, particularly for sensitive data relevant to commercial operations and national security, such as defence supply chains.

The landscape of business-to-business relationships will continue to evolve, presenting opportunities for agile SMEs to carve out their niches while also leading to consolidation. We can expect to see increased mergers and acquisitions within the 3PL sector, alongside a trend toward greater outsourcing, as seen in recent partnerships like Currys and GXO. Major brands will continue to outsource their warehousing needs in order to access specialised expertise. Such outsourcing is less risky when effective data sharing is in place.

As digitalisation advances, barriers will diminish, paving the way for the emergence of a sophisticated ecosystem of businesses that leverage digital platforms and data sharing for enhanced operational efficiency.

The Warehouse of the Future: Predictions from 2025 to 2050 white paper touches on issues such as warehouse property, labour trends automation, AI, energy and much else.

You can read the full report here - https://tinyurl.com/27prshlf