Sean Henry came to a revelation when he was working on a manufacturer’s supply chain: There was often a mismatch between warehouse capacity and demand.
“A lot of [their] locations had hundreds of thousands square feet of empty space that we were trying to figure out how to utilize from overplanning,” STORD Founder and CEO Sean Henry told PYMNTS in an interview. “And a lot of [their] locations were just completely out of space, and we were using third-party warehouses.”
This less-than-optimal use of resources gave Henry an idea: Why not take the concept of a third-party warehouse and apply it to a shared-capacity model? In essence, he thought it would work like the Airbnb of warehousing. Companies and individuals alike have excess space, and he thought a new platform could connect them with companies that need to store goods.
Henry’s business idea could not have come at a better time. Around the world, shippers are changing the way they manage their inventory. In 2002, Henry said shippers held 57 percent of goods in distribution centers they leased or managed themselves. But a decade later, Henry said 87 percent of companies have their goods in third-party warehouses — creating a market ripe for opportunity.
As a result, Henry helped to create STORD. The company provides tech-driven warehousing and distribution services through a global network. But a client doesn’t have to be a large corporation to utilize STORD’s services.
The Value Proposition
Henry’s ideal use case is a small business. With services such as STORD, smaller shippers — such as CPG brands — can convert their warehousing expenses to variable costs. As a result, they only pay for the number of units they’re shipping. At the same time, these smaller customers can access the same tech-driven solution that STORD’s enterprise customers enjoy. With this set-up, smaller customers get access to a much “more robust supply chain software and network” than they might otherwise be able to use.
STORD also solves a problem facing many CPG companies: How exactly do you get your product closer to retail customers? One CPG customer in Austin, in particular, struggled with this problem.
“They were getting orders from major retailers in the Northeast and on the West Coast,” Henry said. “They could not actually stock inventory in those locations.”
But through STORD, the brand was able to spread their inventory across multiple cities: Dallas, Philadelphia and Los Angeles. As a result, STORD can help brands — such as its client in Austin — get products close enough to stock the locations of major retailers. And the opportunities for storage through STORD’s platform goes beyond dry goods. The company has handled a variety of products from crab meat to water bottles. STORD offers facilities for frozen products and even has USDA-approved facilities.
The End Goal
Overall, STORD hopes to expand like many companies in the sharing economy do: It seeks to grow its product offering without owning assets. Instead, STORD wants to own the platform.
“Our main goal is to build the largest distribution company we can by owning the software and owning the customer relationship,” Henry said.
STORD is entering a space that already has several players. But Henry said STORD differentiates itself through its expansive network, which offers many more warehouses than its competitors. Of the top warehousing companies, many have less than 10 warehouses. One company in particular has less than four warehouses, Henry said. As a result, these competitors can’t give their clients true scale. Furthermore, other companies may focus on, say, eCommerce fulfillment. That entails moving small parcels — not pallets, as STORD does.
To help grow STORD, the company recently raised $2.4 million in funding through a seed funding round led by Dynamo and Susa Ventures, according to Crunchbase. Henry plans to use that funding to grow his team and build out his client base. Beyond that, the company is looking to create a playbook in 2018 for repeating the STORD model in new markets. In the long term, STORD hopes to expand its business globally.
Said Henry: “When we move to new markets like Europe, Asia [and] Latin America, we can tell our clients at the end of the day, ‘through STORD’s single-source inventory order management and analytics software, you can now move your product globally without barriers at the touch of a button.’”