E-Commerce expansion for eStore Logistics

By: Ruza Zivkusic-Aftasi


Leading e-commerce fulfilment company eStore Logistics is ramping up its distribution network after securing a new warehouse in New South Wales

 

Artist’s image of Marsden Park facility

A new $25 million facility at Marsden Park, NSW, is set to complement eStore Logistics’ Australian footprint and increase customer base, and will be operational in November.

The high-tech facility is being built by Logos Property and will add to eStore’s current Australian total of more than 50,000 square metres.

The expansion highlights eStore’s rapid growth and aims to enable online retailers to deliver orders to their customers faster at a lower cost.

The company has partnered with property and supply chain consultancy firm TM Insight to optimise facility’s operational layout and maximise storage density.

Founder and managing director Leigh Williams says the partnership began a year ago, with the Marsden Park facility being the second site he has worked with TM Insight for.

The first 13,000 square metre warehouse in Derrimut, Victoria, was secured last September in just six weeks.

 

eStore Logistics facility in Derrimut, VIC, has over 20,500 pallet positions

 

More than a service

On the hunt for a solution with more depth and detail, Williams reached out to TM Insight due to that firm’s "detailed property sourcing process".

"We needed a solution which was more than just a traditional real estate agent service which consists of just opening doors and showing us potential facilities without understanding our business and requirements in detail," Williams says.

"We approached TM Insight for our additional Sydney DC as we viewed them as a trusted partner who we could collaborate with to get the best possible property outcome.

"Their property sourcing process is detailed and would ensure that our decision making process was supported the best possible property sourcing process and information," he adds.

"TM Insight’s property sourcing approach is like none other I had experienced before as they spent time understanding our business and requirements through design sessions, used the information they had learned to design a facility which would meet our operational and commercial goals and managed a request for interest process with fifty plus property owners and developers which met our requirements."

TM Insight has also developed a detailed design brief which was distributed to over 20 interested parties before narrowing down a shortlist.

"This property sourcing process is key and is why we chose to partner with TM Insight for our additional Sydney DC," Williams says.

 

eStore Logistics founder and managing director Leigh Williams

 

World leading systems

Featuring complex algorithms with a view to minimising manual handling and human decision making whilst maximising accuracy, the Marsden Park facility will consist of world leading logistics systems to support robust e-commerce fulfilment processes.

EStore went through a number of design sessions with TM Insight to discuss their requirements and commercial goals, including facility shape, racking layouts, stock flow, traffic management, safety of site and location of facility.

"TM Insight have many years of experience with DC design so it was helpful to bounce ideas off one another," Williams says.

"TM Insight delivered over 20 differed designs of the building as we went through a number of design iterations with their team and they were very patient with us."

With clients such as Kogan.com, Temple&Webster, and Patagonia, eStore fulfils up to 45,000 orders a day.

The Hollingworth Road site has a maximised storage density of 1.5 pallets per square metre of floor area, and will hold 17,000 pallets.

Over 70 vehicles are expected to access the facility between 7am and 6pm, with Australia Post, Toll IPEC and Allied Express being the main carriers.

EStore Logistics utilises the Manhattan Associates tier one warehouse management system (WMS), SCALE, which, according to Williams, is highly configurable to cater for specific client requirements.

"Our warehouse management system is preconfigured with suitable packaging types such as cartons and satchels for each client with multiple sizes and options of packaging available," he says.

"Packaging types are agreed with clients when they join eStore Logistics.

"When we receive an order for a client, individual item weights and dimensions are considered and our WMS automatically carbonises each order, ensuring every single item is allocated to the most appropriate packaging size.

"This takes packaging selection decision making out of staff hands and effectively eliminated packaging selection errors, provides a more efficient and standardised process for packing orders and eliminates the requirement for manual entry of carton weights and dimensions."

All inbound and outbound stock movements are system directed to ensure accuracy.

EStore’s proprietary freight optimisation software calculates the most suitable and cheapest carrier to send client orders from inventory stored across multiple warehouse locations.

Each freight carrier has different pricing structures for different zones around Australia and the rest of the world.

"Our system uses consignment chargeable weight and destination postcode to calculate the cheapest carrier from each warehouse where stock is located," Williams says.

"This ensures that the most cost effective and fastest shipping carrier is always used.

"eStore Logistics holds extensive commercial accounts with Australia’s largest priority distribution companies. This allows us to deliver goods to consumers at an extremely low price."

 

Articulated forklifts are used in narrow aisles which maximises storage capacity

 

Storage density

About 70 per cent of the racking aisles is 2.2 metre narrow aisles, with stock pickers and articulated fork lifts operating within.

The rest of racking aisles are 3.2 metres, allowing regular truck operations within.

By utilising narrow aisles, eStore has been able to improve pallet density.

It will service 10 clients upon opening, and expects to gain another five by 2019.

With storage capacity always a hot topic when designing a warehouse, Williams says he wanted the highest storage yield per square metre.

eStore currently occupies a 16,000 DC in Melbourne which yields 1.25 pallet positions per square metre (20,000 pallet positions), with 30 per cent of floor space allocated to stock staging and rework.

"For our additional Sydney DC we worked on a smart design with TM Insight which involved altering roof heights, roof pitches, warehouse shapes and various racking designs which achieved 17,000 pallet positions for this 12,500 square metre facility which is about 1.5 pallet positions per square metre," Williams says.

"This was all done while ensuring that inward and outward stock throughput and efficiency was high and also with 30 per cent of the warehouse floor being allocated to stock staging and rework."

 

TM_Insight Founders and Directors Travis Erridge and Milan Andjelkovic

 

Room to grow

TM Insight director Travis Erridge says the Marsden Park site was chosen due to adjacent land which would allow for future expansion.

"There’s every chance that by the time we finish the facility will be full, so we already have started to look at what our expansion options are," Erridge says.

"It will be dependent on the work secures over the next 12 months."

With storage density in mind, the building has been designed from the inside out.

"We’re worked out what the storage profile would look like from inside, and then we did a lot of work on designing to maximise the storage capability – which is unusual, normally a building gets built the other way around where they max out the height of the building for fire regulations, but we’ve actually maxed out the storage capability," Erridge says.

He says he’s seen more of smaller operators investing in high-end facilities due to the growth in eCommerce, with many moving away from cheap and old warehouses.

"The days of walking into an old B-grade type of facility because it’s cheap are gone, people need to understand what their operations are and find the building that suits that operation," Erridge says.

"When you think about property cost being less than 30 per cent of an operating cost and 70 per cent being freight, it makes absolutely no sense to have an operation into a facility that doesn’t reach their needs anymore.

"This has been something that’s been happening over years in the large end of town; the ASX listed companies have always over the last 15 years thought about this but we’re now seeing private companies really concentrating on what their operation looks like – it’s all about lean operation, speed to customer, and not so much saving a dollar or a square metre on a building that doesn’t suit."

 

All warehouse activities are system directed using Manhattan Scale WMS

Great strides

Much has changed since Williams founded the company in 2008, at the age of 26.

Starting out with just one casual forklift driver and a client, Williams began operating from a 700 square metre warehouse in Melbourne, managing every aspect of the business including IT, finance and accounting, sales and marketing, operations, HR, administration and safety.

"My background was in IT and process improvement so I spent over three years at the beginning learning about eCommerce fulfilment and developing best in-class IT systems for eStore Logistics to support the growing online retail sector in Australia," he says.

"Today we have up to 300 staff across four sites in Melbourne and Sydney, and over 60 clients including large ASX listed online retails."

He expects to employ another 100 staff at the Marsden facility, fulfilling up to 20,000 orders per day.

With eCommerce on the rise and shoppers turning online for convenience, Williams has no plans of slowing down.

"It’s going to mean more warehouses opening in more locations, which is going to result in reduced cost for our clients," he adds.

He expects to secure an additional facility with TM Insight once the Marsden Park warehouse opens.

"By bringing in an additional warehouse in Sydney we’re going to be able to deliver faster and also doing it at a lower cost because we’re closer to customers in NSW and in QLD," he says.

"Before eCommerce was popular in Australia, I was buying things online from eBay from overseas 10 years ago. I could see that this was going to be the future and at the time there were not many specialised eCommerce fulfilment providers in the market which is what led me to back myself and start this business.

"I certainly believe with Amazon arriving in Australia and eCommerce online retailers popping up every day, online retailers will continue to flourish and grow," he adds.

"I think department stores will find it tough."

You can also follow our updates by joining our LinkedIn group or liking us on Facebook