My warehouse is 10,000 SQ ft. It’s not massive, but it is by no means a small operation. 15–20 employees have to be placed on payroll to receive these goods, break the daily shipments down and file the goods in the appropriate places.
Picking the daily orders. Packaging the items with protective materials to keep them safe and then boxing them according to what has been selected as the optimal shipping method.
That warehouse costs $12,000 per month and that’s only for the monthly rent. In addition to that, tack on utilities, insurance, property taxes, and other standard fixed costs.
The initial leasing agreement payments — Electric, utilities, I’m finding myself spending a small fortune on those stupid little “Keurig Coffee Pods” because my employees seem to believe that they are entitled to having a high-end cafe for a break room, and I’m too insecure about being called cheap, I just carry it on. 15–20 different personalities, problems and who knows what else. Healthcare, Social Security, Unemployment, cameras all over the warehouse, time spent viewing these cameras. All of this and what am I ultimately doing my best to accomplish? I’m looking to receive the goods from the suppliers that I order them from and store them. When ordered, have the products gathered and shipped out to the proper destinations.
This guy Jeff walks into my office at the warehouse one day and says, “Listen, Joe. I’m going to make you an offer that you can’t refuse. You see this warehouse? You can get rid of the entire thing. The employees? Benefits? Worker’s Comp? Jillian, the blonde, hates Stephanie, the brunette. And security just told you that they have learned that Jillian has a history of office place violence? Poof. GONE.
Go sit on a beach with a laptop and your cell phone. Source your products. Make the deals with the suppliers and then place the orders for the products. Have the suppliers ship your orders to one of my 100+ MASSIVE warehouses across the country where my workforce of 125,000 employees will receive them and store them. When ordered, we will pick, pack and ship your products. I’ll even throw in there two-day shipping — on us. You on a beach with your laptop and a phone. I’ll make this happen for you and ask for 1/3 of the sales.
Woah, there. A 1/3 partner — pretty big deal. You will take this massive, expensive operation off of my hands and mind? You will eliminate how much in company expenses? Are you seriously insisting on handling all of the customer service issues that come with my entire business as well? You say that your company has revolutionized modern day logistics and continue to maintain the benchmark standard? Jeff, my man, sign me up, sir.