How to Increase the Capacity of an E-commerce Warehouse Without Expanding the Building?

(source: Arvato)

The current economic situation in Europe has slowed down sales growth rate, including in the online channel. Warehouse developers are taking a more cautious approach to new projects, and thus mainly bespoke facilities are being built. This results in limited access to new space. The response to these market conditions is to maximise the use of the building volume to increase storage space for goods and operations.

The popularity of online shopping has triggered an increase in demand for professional logistics services and warehouse space. At the end of Q3 2023 (according to the Savilis report), the average warehouse vacancy rate in Europe was 4.3 per cent, which demonstrates the strong condition of the industry. Although the economic situation in Europe has slowed down sales dynamics, including in the online channel, analysts predict further growth, but for the time being at single-digit levels. 

Due to the increase in investment costs (purchase of plots, materials, construction and, above all, the cost of capital), it can be seen that developers are approaching new projects with greater caution. As a result, mainly customised warehouses are being built, and to a lesser extent so-called speculative buildings. This results in limited access to new warehouse space, and the construction time for new facilities will be longer than before. In addition, rents in logistics centres are becoming more expensive, which will unfortunately drive warehouse service costs up.

Warehouse infrastructure – how to make the most of your warehouse space

The best approach is then to make maximum use of the volume of the building to increase the storage area for goods and operations. The most popular solution on the market is the construction of a mezzanine floor, which creates extra space in the warehouse, depending on the technical capacity of the building and, of course, the business needs of the project. The undoubted advantage of this solution is direct access to the shelving racks, just like on flat surface. In addition, by using a conveyor system between floors, companies ensure the efficiency of the picking process.
The mezzanine floor can often be expanded (e.g. by adding another floor) and can also be relocated to other warehouses using most of the structural elements.

More advanced solutions that make use of the building volume are automation systems in the storage area.

It is worth mentioning two systems that work well for Arvato warehouses. These are AutoStore (dedicated mainly to small-sized products, e.g. cosmetics or consumer electronics) and Shuttle System, which proves its worth in omnichannel service. Both solutions not only offer the possibility to increase storage space (without enlarging the building), but additionally speed up the picking process by delivering products directly to the employee through a GTP (goods-to-person) process. The size of both systems can be adapted to the size of the warehouse building, making optimum use of every cubic metre of available space.

Cooperation with a logistics operator – why it is worth doing

The above solutions will only work for businesses of a certain scale, as they require millions of euros of investments.

Companies that are rapidly expanding sales in the e-commerce channel need to invest in efficient logistics, and this is easier to do in collaboration with an experienced outsourcer, such as Arvato. The operator will propose the optimum solution for handling intra-warehouse processes and, with the right contract length, can also finance the investment. The equipment of the warehouse depends mainly on the type of products that are handled, the channel in which the company sells (B2C/B2B), as well as the scale of the business operations.

Companies receive full support for their logistics processes, as well as access to the latest and most suitable solutions, both in terms of IT and infrastructure. As part of the fulfilment service, a full logistics support is provided, from acceptance of deliveries, storage of goods, picking and packing of products, through to dispatch, as well as returns handling and VAS (value added services).

About the author

Przemysław Klich – Arvato