Misco is to close its UK warehouse at the end of the year, saying the rise of drop-shipping has decimated its usage and made it too inefficient to keep running.
In an initiative designed to save a minimum of £1.5m annually, the reseller is outsourcing its warehouse functions to a third-party logistics provider.
All 65* warehouse staff at the 80,000 sq ft location will be made redundant, Misco CEO Alan Cantwell confirmed to CRN.
The 24 sales staff also based in Greenock will be kept on but will relocate to a new office nearby in Q1 of 2018, he said.
Cantwell led a management buy-in of Misco in March and the move is part of the new team's (pictured below) efforts to return it to break-even after group losses reached about £16m last year.
Some 105 UK staff have already left the business under a recent sales and marketing restructure, while headcount at Misco's Budapest shared service centre has also been shaved from 340 to 200.
Cantwell said that Misco was left with little choice but to close the Scottish warehouse.
"Like a lot of things in this business, this really should have been challenged and looked at a long time ago," he said.
"We've taken a really hard look at it. The logistics centre there was originally set up to ship 6,000 parcels a day, and at present we are shipping between 400 and 500 a day. Things have moved on. We are drop-shipping pretty much everything - the majority of parcels now go straight from logistics through to the clients, so we really don't need that facility. It's a very expensive facility for the number of units that are going through it, and our 400 parcels a day will only go one way.
"There are some very good third-party logistics firms out there who can do it better than we do and do it cheaper, because that's all they do."
Misco is in the throes of negotiating a contract with a third-party logistics provider which will take over the functions before Christmas. Its shortlist has been whittled down to two, with a decision set to be made in the next week.
The move will not only save money, but also improve the customer experience, Cantwell claimed.
"The thing about third-party logistics is it's completely flexible based on volumes, so the minimum saving we're expecting from this exercise is £1.5m a year," he said.
"We will save approximately 10 per cent on our shipping costs, which in turn can be passed on to our clients. Ultimately, even if we weren't ready to close the warehouse we would need to scale back the team there. And the problem for any business is that when you scale back the team, you lose your flexibility to deal with busy periods. We didn't want to scale back based on a budget and then find we get a surge in sales and it affects clients. Whereas if you look at the third-party logistics firms, such as NX or Yusen, their scalability is phenomenal, so if we suddenly found we needed to do 1,000 parcels tomorrow we could do it in a heartbeat."
The software Misco uses in Greenock will also soon be defunct because it is incompatible with the Netsuite back-office system the reseller is about to roll out.
The choice of third-party logistics provider will be based partly on how well they integrate with Netsuite.
'All our competitors have gone down this route'
The 65 affected staff will be made redundant in two tranches, with the process for the first wave of redundancies - which will encompass roughly half - starting today. Staff were informed this afternoon. The remainder will be kept on until towards the end of the year.
"If you look at an 80,000 sq ft warehouse with 65 staff shipping 400 parcels a day, and you do the sums, it means that for every parcel...
*Since this article was published, Misco has got in touch to clarify that the actual number of staff affected is 62
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