This Billion-Dollar Last Mile Opportunity

GM! It's Thursday, March 9th - Today, we're covering growing demand in fractional warehousing (which could be a cash cow 🐮) and Salesforce's decision to ax its M&A team at exactly the wrong time. 

 - Callum


This Billion-Dollar Last Mile Opportunity

10 retailers make up 68% of all U.S. e-commerce sales, with Amazon alone accounting for more than half of all online sales.

But you should never ignore the long-tail opportunity. There are still millions of small e-commerce merchants in the US that have grown thriving businesses from home that are outgrowing their garages...

The Big Idea

The average warehouse size in the U.S. is over 50,000 sqft, but most small businesses only need a fraction of that space. That’s where micro-warehousing and co-warehousing come in.

Micro warehousing

  • Micro warehouses are usually 10,000 sqft or less and are strategically located close to consumer bases

  • These warehouses allow businesses to offer next-day shipping or same-day pick up

  • Last mile delivery accounts for 53% of total delivery cost, micro warehousing helps to lower that cost


  • Co-warehouses are shared working facilities that are home to multiple small businesses

  • Small businesses operating out of makeshift storage units can run into a variety of logistical issues that increase operational costs and decrease efficiency

  • Co-warehouses offer clients a variety of services that reduce these logistical issues such as daily carrier pickup, loading docks, and accounting services.

Here's The Innovation

We live in an 'on-demand' economy where consumers expect their orders to arrive instantly. Large retailers have succeeded in achieving the coveted next-day delivery, but small businesses are still struggling – until now.

Alternative warehousing is effectively democratizing e-commerce fulfillment. Small retailers can purchase as much storage space as they need through flexible monthly payments and scale to size as their businesses grow.

Businesses building on this wave:

  • ReadySpaces - Operates 32 warehouses and services a customer base of over 2,000 businesses. The business was founded in 2019 and raised $36m.

  • SaltBox - Provides co-working and warehousing space for up and coming e-commerce stores. It was founded in 2019 and raised $128m.

  • Portal Warehousing - Private equity real estate firm Capstone Equities founded the business in 2021.

Key Observations

1) Lower Costs Will Increase Demand: When prices decrease - in this case warehouse storage space – we don’t see a linear growth in demand. We see exponential growth.

The increase in demand coming from small businesses is simple; businesses that would never have considered warehousing can now dip their toes in the water and test out the logistical boons of fulfillment centers at a price they can afford.

2) The Money Is In The Last Mile: It isn’t just the little guy who wants in on fractional warehousing.

Big retailers are buying micro warehouses to increase efficiency through a hub-and-spoke model. Regional delivery centers are the hubs while the micro warehouses positioned close to various urban population centers act as the spokes, making next-day shipping even easier and more cost-effective.


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Salesforce Just Axed Its M&A Team

Here's what you need to know:

Did you know that Salesforce (Market Cap: $182B) has made 71 acquisitions, costing them over $61B?

There's no doubt that this aggressive M&A strategic is what turned it into a cloud-based software empire. Despite this success, Salesforce just dissolved its M&A committee, signaling an end to this strategy. Some are questioning the wisdom behind Salesforce CEO Marc Benioff’s decision.

The takeaways: 

  • Marc Benoff, CEO at Salesforce, has sacrificed his winning strategy to meet the desires of five activist investors

  • The company will refocus towards profitability and away from large acquisitions

  • This decision follows Salesforce’s $28 billion acquisition of Slack in 2021, which decreased profitability and made Benioff vulnerable to criticism from activist investors