Analyzing the potential to start offering additional warehouse services for a logistics real estate player

Abstract

In the past, a warehouse was considered nothing more than a grey box. Nowadays, companies start focusing more on an attractive designed warehouse, as this could lead to important benefits in the war for talent and in creating a strong brand identity. In this report, the opportunities for WDP to start offering additional services besides its core business are investigated. To define a recommendation, four parts are researched. First, an analysis is executed to determine whether the additional services market shows potential. Based on desk research about the competition and trends in this market and by conducting client interviews, the conclusion is made that this market shows great potential in the future years. Second, the potential position of WDP in the additional services market is defined. To do so, two factors are taken into account: insights from comparable players about their way of working and the needs of the clients in terms of additional services. Based on this research, it can be concluded that clients are interested in a long list of additional services and that they consider WDP as a potential external partner to execute these services, if its price/quality level is conform the market. Third, to determine whether it is interesting for WDP to enter this promising market, it is defined how much value can be created. Value can be created in a direct way via additional revenues and in an indirect way via client satisfaction and the avoidance of vacancy costs if a client decides to sign a (new) contract because of these warehouse upgrading services. Based on this direct and indirect value creation, break-even analyses are executed to determine whether it is possible for WDP to cover the direct costs of marketing and a FTE who coordinates the offering with the value gained by these services. Based on these analyses, the conclusion can be made that it is possible for WDP to create value, when the direct and indirect value creation are combined. To cover the direct costs only with additional revenues, some difficulties might arise if there are not enough clients willing to choose for a big project. However, when the reduction of the opportunity costs by avoiding vacancy is also taken into account, it seems possible for WDP to cover all direct costs. Fourth, the implementation in the current way of working within WDP is researched. The conclusion on the implementation is that change management will be required. Every Business Development, Project, Portfolio and Property Manager will need to adapt its mindset of only focusing on the number of square meters. With the offering of additional services, they also will need to give attention to sales and proactively convincing the client of the added value of these services. Only when internally everyone believes in the offering, an external launch can be organized. Based on these four parts that are investigated in this report, the research question “Is it interesting for WDP to start offering additional warehouse services besides its core business?” can be answered. Based on all observations, the recommendation is to continue with this idea. There are opportunities in the market, WDP will be able to create value and in addition, the offering also highlights its client centric strategy and its ESG roadmap goals.