It is becoming quite obvious very quickly the business we have been given/handed on a plate is a gold mine of opportunity.
Last night I had dinner with one of my best friends who also happens to have an online fulfilment business. He has some seriously big accounts that involve thousands of deliveries every day so the business we are involved in is similar, but has different challenges.
I knew he wanted to help but had no idea by how much as he s handing over some of his clients that overlap our distribution foot print. He has clients that he services which are more of a hassle due to booking delivery slots for places like Amazon. We are a top 1% seller on the main online platform in South Africa so adding new clients to the distribution solution network we deliver is not a big deal. If you mess up the delivery slots it is easy to have an account suspended so the pressure is real.
Two of the clients will cover the entire warehouse monthly rent, but will take up less than 5% of the space and not affect the delivery system. One client has 70 pallets of stock with the current rate of R400 ($22) per pallet monthly so it is small numbers that add up quickly.. The main plus is we are already booking delivery slots weeks in advance and adding an extra slot is not a problem. A company that has to do this when it is not pat of their fulfilment program would see this as a hassle and time consuming.
In February Amazon goes live here in South Africa so this would be a bigger issue as these clients would now need booking slots for two different companies at two different venues. We are doing my friend a favor whilst he is also helping us. I am sure there are other fulfilment logistics businesses out there with a similar problem and knowing this the potential for growth is rather big.
Once you know the various online platforms and the systems on how they operate knowing exactly what to do you are only one of a few offering this service. Most companies have gone to pick and pack solutions over the last 5 years signing up to these massive companies who charge ridiculously high prices for this service. With us having a small family run operation which we have with room to add a few more companies it wont take very long to see where the growth will come from.
Like with any business the more you add to the delivery foot print the cheaper every delivery becomes meaning the costs start to drop and the profitability rises. This was not the original plan when we agreed to take over the current warehouse business as we needed to reduce the costs for that business model. The adding of new clients does change things somewhat even though we haven't even started the first month yet which is kind of exciting. The business has already grown and we have a few weeks before the business goes live. Word of mouth will no doubt take us to maximum capacity within the next 6 months as I realistically believe we will have room for only another 350-400 pallets of stock and then we are back to the fire sprinkler problem again which we are trying to avoid.
