Traditionally, warehouses have been massive spaces which are located wherever space is cheap and plentiful. However, this method of centralized warehousing is losing traction as the retail landscape changes. Instead, more and more companies are opting for smaller warehouses in ideal locations which stock the most popular products from the area they service. These decentralized warehouses are able to rapidly service most of the orders that are placed within their regions, allowing for same-day or next-day delivery on many of the products their customers order most.
Decentralized, small warehouses have many other advantages beyond the speed of delivery. A smaller warehouse means cheaper operating costs such as electricity and heating, as well as reduced labor costs with fewer staff members. Smaller warehouses also have fewer restrictions on location, and thus could be strategically placed closer to where products are manufactured or sourced, which reduces the cost of shipping the products between these sites. Smaller warehouses are also cheaper to establish, meaning companies can afford to set up a smaller warehouse earlier and more frequently than they could with larger warehouses.
As customer demand continues to shift towards faster and more efficient delivery, retailers will likely be forced to continue moving towards small, decentralized warehouses to meet it.