THE COMPANY
G&B Fulfillment is a rapidly growing third-party logistics company. Their specialties include multichannel eCommerce order fulfillment and retail distribution.
THE CHALLENGE
G&B had a renewal coming up on a 315,000 square foot warehouse located within the Inland Empire (Southern California). The new rent cost was a significant increase from what they had been paying over the original lease term (almost 300% increase) & the implementation of the Indirect Source Rule (ISR) recently passed by the South Coast Air Quality Management District drove the costs through the roof.
The company initially considered a warehouse location in Phoenix, AZ, Victorville, CA, & Bakersfield, CA. However, the high rent costs & additional drayage costs became a significant concern.
THE SOLUTION
G&B’s met with Summitt Hogue, the Managing Partner at Growe, through a referral from another client. Summitt proposed an alternative solution, suggesting that G&B consider the Central Valley of California (Sacramento, Tracy, Stockton, Etc.), to avoid high rent and drayage costs. The G&B team agreed to explore this option, and they flew out to Sacramento to tour some potential buildings.
After visiting multiple buildings from Tracy to Stockton to West Sacramento, Summitt recommended a darkhorse choice, a building strategically located near the Sacramento airport. Summitt was able to negotiate a highly favorable deal that resulted in a significant cost reduction compared to Phoenix, Bakersfield, and other West Coast markets. Total costs, including warehousing, drayage, and operational costs, wound up being 34% less expensive.
Summitt also conducted extensive labor, crime, and drayage studies to ensure the new location would provide the best possible combination of cost savings, security, and workforce availability. This allowed G&B to make a calculated decision on the building they would ultimately lock in as their new home.
THE RESULTS
Ultimately, G&B was able to secure the new warehouse location in Sacramento for 34% less than it would have cost to operate in Phoenix and significantly less than if they were to operate in the Inland Empire. There were no unfortunate trade-offs here either – this location checked all the boxes in terms of cost, labor, crime rate, and drayage.
With lower costs, G&B has been able to operate at a higher profit margin. The strategic decision to move to Sacramento enabled G&B to maintain a competitive edge in the market while enhancing their operational efficiency and customer satisfaction.
Summitt went above and beyond to make sure we had every option to evaluate & dove deep into market economics, labor availability/costs, drayage, crime reports, etc. to make sure we had every ounce of information we needed to make the best decision for our business.
– Vin Gulisano, CEO of B2C 3PL Advisors, LLC