Payments As A Service

On-Demand Stuff-Storage And Space Reclamation In An Increasingly Urban World

Tiny city apartments create big headaches for residents needing space to stash their stuff. For September’s Payments as a Service PYMNTS Tracker™, Closetbox CEO Marcus Mollmann reveals how his own moving and storage frustrations inspired him to launch an urban on-demand pickup and storage marketplace. How payments made that play possible, plus updates on more than 90 PaaS providers — inside the Tracker.

The late comedian George Carlin once referred to a house as “a place to keep your stuff while you go out and get more stuff.” Though Carlin used “house” in his routine, occupants can sometimes come to a stark realization no matter what type of dwelling: They have too much stuff and not enough space to store it. When this realization hits, it’s time for occupants to make tough choices about the stuff they want to hold onto and the stuff they need to throw away.

A reality of collecting stuff over a lifetime is there are some things with which people can’t bear to part ways, even if they don’t use the items regularly, such as old photographs, skis, golf clubs, winter coats, clothing the kids have outgrown, old homework, mementoes, knick-knacks and whatnots. There are also the items people want to hold onto and make better use of once they upgrade to a living arrangement with more square footage, like a dining room table or exercise equipment — items that can typically dominate a single room.

That’s where storage facilities can come into play. Stuff owners who need to make space, but don’t want to lose permanent access to their things, can rent or lease storage units. These storage units act as an alternative to throwing away several years’ worth of possessions, thus freeing up space in a residence. According to the most recent data from IBISWorld, storage and warehouse rental markets in the U.S., including self-storage facilities, generate approximately $38 billion in annual revenue.

In urban areas, finding a suitable self-storage location can be as difficult as finding a vacant parking space — and sometimes just as tight, not to mention costly, in more populated markets. Recent research from the Self Storage Association, a non-profit group advocating on behalf of the storage industry, noted that in a pricier market like the New York Metro area, a smaller, non-climate-controlled, 25-square-foot storage unit can cost $90 a month to rent while a larger, 200-square-foot unit can cost $416 a month. If the self-storage unit is in the suburbs, the consumer must also factor in the cost of renting and returning a van or truck, paying for gas and the grueling haul up and down stairs — not to mention the risk of double-parking and getting a ticket or being towed and having to deal with an entirely different kind of expensive storage.

Finding self-storage for stuff can be a frustrating experience, one that could result in a rant which makes good use of at least a few of Carlin’s infamous seven words you can’t say on television. That’s where storage providers such as Closetbox come into play. The full-service moving company, which launched in 2014, enables users to have boxes picked up by professionals and stored off-site, all from an app.

Closetbox CEO Marcus Mollmann recently spoke with PYMNTS.com about how growing urban populations could lead to an increased demand for storage space.

Make room for babies

Mollmann said he came up with the idea for Closetbox after his family went through a sudden expansion with the arrival of twins in 2014. There were four children in the Mollmann household, and the two adult Mollmanns sharing the space quickly realized they needed to downsize their possessions to make room for their growing family.

“My wife and I could barely open a pickle jar,” Mollmann said of his family’s increasingly cramped quarters. “We had to create more space in our home.”

First, they decided to move some of their stuff to the basement to convert their dining room into a playroom for the children. A few months later, Mollmann said, they decided to list their home on the market. That decision helped the Mollmanns realize they still had too many things.

“A realtor came over and said, ‘It’s too cramped — you’ve got to get some of this stuff out of here,’” Mollmann noted.

Easier said than done. With four kids to watch over, he and his wife had their hands full and were not able to do much of the lifting on their own. Their realtor suggested a self-storage unit, but what Mollmann really needed was some physical help to move the family’s bigger items.

That’s how the idea for Closetbox came about. Mollmann, who previously worked in real estate development, said he launched the company to help other families address their own moving headaches by offering the services needed to manage and execute the process.

On-demand urban storage solution

According to Mollmann, Closetbox is designed to help urban residents drop off and retrieve their stuff, on-demand, similarly to how rideshare services like Uber and Lyft can help urban dwellers get access to transportation easily through an app.

Closetbox currently services more than 60 U.S. markets and offers consumers an option to rent storage units ranging in size from 25-square-feet to 200-square-feet from an affiliated storage facility. Prices for each type of unit vary by regional market. Users can sign up for the service online or through a mobile app, enter their credit card information and arrange for item pickup at a designated location. Contracted moving professionals will arrive at the address, load the pre-packed items and bring them to a storage facility within the Closetbox network.

The service also includes a digital dashboard available online or through the app which enables users to track the transportation of their goods. If the user wants a specific item returned, the service offers an inventory management tool giving users the option to request a specific piece. Requested items can be returned within 24 to 48 hours to a pre-determined location.

Mollmann told PYMNTS that 99 percent of users pay for services using a credit or debit card, including payment for recurring monthly subscription charges. The company intends to accept mobile payment methods in addition to traditional payment cards through its app later this year, he added.

The goal of the service is to help the traditional moving operation go digital by offering consumers a straightforward and convenient online shopping experience — including a digital shopping cart — to purchase moving services, supplies and storage from their desktop or mobile device, Mollmann said.

Recalling his own previous moving experiences which required carbon paper copies for moving receipts and paper checks to the moving providers, Mollmann explained he set out to create a service that removed traditional moving frictions.

“We’ve streamlined [all of that],” Mollmann said. “It is a full eCommerce transaction on our site.”

A self-storage boom?

According to a report released by the United Nations last year, more than half of the world’s population lives in cities. That figure is expected to grow to two-thirds by the middle of the century.

With more people heading to urban areas, Mollmann noted, storage space will be available at an increasingly higher cost. But, he also pointed out that larger storage units which can accommodate more stuff are usually located outside of cities, where the market for building storage facilities is cheaper.

“You have a massive disconnect between where people are now living and where storage units [are being] built,” Mollmann said.

From his experience in real estate development, Mollmann recalled that office space, retail and residential properties are often the top priorities for developers while self-storage is an afterthought because it won’t receive as much high-volume usage as the aforementioned property types.

“Storage is typically the last thing in the cycle that gets developed,” he noted.

But, that appears to be changing, Mollmann added. According to an industry report from online storage marketplace SpareFoot, developers have already invested nearly $1.6 billion on self-storage construction so far this year, a rate considerably higher than what has been reported in previous years.

If current trends are any indication, urban residents will have more options available when it comes to storing their stuff to make room in their smaller residences. And, when new stuff comes into the picture, there are on-demand services available to keep it out of sight until it’s needed again.

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To download the September edition of the PYMNTS.com Payments as a Service Tracker™, click the button below.

About the Tracker

The PYMNTS.com Payments as a Service Tracker™ gives an overview of the trends and activities of merchant platforms that not only enable payment processing of new and old technologies, but also integrate with other features to improve the merchant’s experience — including customer engagement, security, omnichannel retail, analytics, inventory management, software and hardware management and more.

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