‘Cowarehousing’ Provider Saltbox Caters to Small E-Commerce Businesses

You’ve started a small business out of your home, and it’s finally taking off. Not only would you like your kitchen table back, but shipping orders out of the garage just isn’t feasible anymore. But on the other hand, a mammoth industrial warehouse would be a waste of space and capital. You’re not Amazon, after all. So where does a successful entrepreneur go when all the options make you feel like Goldilocks searching for the right-sized space for your business as it grows?

“There are now hundreds of thousands of small e-commerce businesses in the United States, and the ecosystem is growing. Those companies have excellent digital tools at their disposal — Shopify, Stripe, MailChimp and social media, for example — so many technologies that enable them to sell online effectively and compete in a real way,” said Saltbox CEO and Co-founder Tyler Scriven.

“However, in the physical world, that’s not the case. These business owners often find themselves operating out of garages, basements or self-storage facilities and they have labor and supply chain issues. So while on the one hand they have great digital enablement, they have almost nonexistent logistical enablement," he continued.

That’s the problem Scriven said Saltbox solves. The new company is bringing a coworking-style model to the industrial sector with “cowarehousing." Small businesses, which have much different needs than those that can be met by most common warehouses, can rent warehouse and office space together on a monthly basis. They can also take advantage of the Saltbox-provided shipping and logistics services under one membership.

The company opened its first location in Atlanta where the company was founded. They also have facilities in Dallas and, as of this month, Seattle. Scriven said they plan to expand with new locations in existing markets as well as Los Angeles and Denver by the end of the year.

Across the various locations, members can rent as little as 150 square feet of space to 8,000-square-foot suites that can be expanded or contracted with business needs. All size options grant access to the in-house photography studio, meeting and conference rooms, common spaces, facilities to pack and ship goods, and even on-demand labor.

“Saltbox is about human-centric design. We are optimizing our business for the human, not the package.”

Tyler Scriven, CEO and Co-founder of Saltbox

LoopNet sat down with Saltbox’s CEO and Co-founder Tyler Scriven for a Q&A to learn more about the company’s model, and the unique way it’s tailoring flexible warehouse space to small e-commerce companies’ needs.

What is cowarehousing?

While “cowarehousing” was a helpful descriptor to provide a point of reference for the new concept, we really think of Saltbox as a company that facilitates and enables logistics. Logistics are an integral part of small businesses, and the physical warehouse is foundational to that — you can’t do too much if you don’t have a warehouse. But for a small business, a 500-, 1,000-, 5,000- or even 10,000-square-foot warehouse is quite hard to come by. They just don’t exist. And they certainly don’t exist in places where [most] individuals want to spend time. That’s why our business begins with physical space, which we refer to as cowarehousing.

Small businesses need logistical support on a smaller scale and in a more unique way than Amazon does, for example, and that requires rethinking how they interact with warehouses. It’s all about taking the core infrastructure of a warehouse — the loading dock, the pallet jacks, etc.— and making those things accessible and affordable to much smaller merchants.

How is this model different from a traditional industrial lease?

Simply, a lot of it is about availability. If you need less than 10,000 square feet of warehouse space in America, you’re going to have a really hard time finding it. There is more than 500 million square feet of self-storage space in the U.S. leased by small businesses, because that’s the best type of warehouse space available to them. But of course, that’s not really a warehouse.

Saltbox also centers around flexibility and scale. Members can sign an agreement with us on a month-to-month basis or for a one-year term, verses a five-year lease with a traditional provider. We require a one-month security deposit compared to fronting significant capital for a full lease and build out. Members can expand or contract their space because the suites are flexible. We have a fully staffed building with security, so orders and inventory can be accepted even if you’re not there. Our users host meetings at Saltbox because they are proud of the office and common spaces. And, they are working in a community of their peers.

If I had to sum up all of these aspects, I’d say Saltbox is about human-centric design. Historically, the world of logistics has been centered on a good or a product. It’s been about the packaged box and how it gets from one place to another, and it’s never been about the human. Logistics has always felt removed from our lives, but in today’s modern e-commerce era, its role is more visible and small business owners carry out logistics activities daily as they interact with goods. Again, it’s about being human-centric, and we are optimizing our business for the human, not the package.

Who is the typical business owner coming to Saltbox to rent space?

The typical user is an e-commerce merchant with yearly sales revenue of about $1 million to $5 million per year. However, there is actually quite a surprising range of members beyond that. On one end of the spectrum you’ll find many hardworking, small business owners that have otherwise been operating from their kitchen tables. They find Saltbox to be a much more efficient and comfortable place to work. They get their kitchen table back, and don’t need to run back and forth to the post office to ship orders. They get to work in a community of their peers that are motivating and inspiring them.

On the other end of the spectrum, we have some large public companies that use Saltbox. Our largest e-commerce merchant is a $40 million-per-year business. These are companies that for a variety of reasons have chosen not to outsource their logistics operations, and prefer to own them. Small merchants may work in a 500-square-foot suite that feels like an office, while a large company may rent an 8,000-square-foot warehouse suite that’s designed for higher efficiency.

What are the different offerings that members will find at Saltbox?

There are essentially two major buckets of offerings. One is the workspace, and [the other] is warehouse suites and private offices. You can rent a 1,000-square-foot warehouse space with an office for three-to-four employees, for example. We have everything from 500 square feet or less to 8,000 square feet of space. The suites are also flexibly built so they can be combined to make larger ones.

Along with that, our users are getting what they need in terms of infrastructure, like access to pallet jacks and loading docks. The buildings also have conference rooms, a kitchen with coffee and a photography studio for their goods. It’s a really humanized space in a way that warehouses typically aren’t.

These are also fully managed buildings, and we offer something we call an “elastic workforce”, which is on-demand labor within the building. Our tenants can go through their Saltbox app and request support from a workforce member who can help them once for fifteen minutes, or for eight hours a day, five days a week. So we’re bringing that same notion of flexibility to a critical aspect of logistics, which is labor.

We design and furnish the warehouse suite with racks and packing stations, etc., which is all that some companies may need for their day-to-day operations. So a company can come into Saltbox and have all of the supplies and equipment they need to manage their own fulfillment and logistics operations, including renting additional equipment from us if necessary.

On the other hand, we also have an embedded 3PL (third-party logistics) provider within Saltbox, that can be used by both Saltbox tenants and outside businesses. Having this service in-house is appealing to our customers because it can be difficult for small businesses to work with large 3PLs, and Saltbox may be around the corner from where they live. A member can drive over to deliver their inventory instead of shipping it to a distributor, and they can have a workspace in the same building as their local fulfillment team and get to know them on a first name basis. It’s again about humanizing logistics activity and rethinking it in a way that reflects the scale and needs of a small company.

You’re currently expanding. What do you look for when selecting your sites?

If you look at the footprint of our current and future locations, one of the things that you will note is that they're not in traditional industrial districts. They’re considered last-mile type locations that are convenient and proximate to where our customers live and where they want to be. The reality is that most small businesses, entrepreneurs and individual owners don’t want to be in the industrial park near the airport — it’s not a convenient location if you live downtown.