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Japan's Askul to turn idle office space into warehouses

Online stationery seller fights labor crunch by decentralizing delivery network

Office supply leader Askul hopes to reduce the number of half-empty trucks driving around Tokyo by creating a network of small urban warehouses. 

TOKYO -- A ritzy shopping and office complex in central Tokyo might not seem like the most natural place to put a warehouse, but Askul, a Japanese e-commerce company specializing in office supplies, is doing just that.

Companies that have a lot of deliveries to make are wrestling with the "last mile" in their supply chains: that is, how to efficiently put their goods in the hands of customers. Askul's new model relies on placing relatively small stockpiles of popular products close to buyers. It may offer a new approach to the entire logistics industry.

As couriers and e-commerce companies struggle with a serious labor shortage in Japan, they are trying to minimize the strain of the last mile. Automating this last, labor-intensive link in the supply chain has been difficult.

Askul, Japan's largest online seller of office supplies, hit upon a solution: convert idle space in urban buildings into warehouses. This was made possible by a legal change. Under Japanese law, only authorized warehouse operators can store goods owned by third parties. Askul and other e-commerce companies asked the trade ministry to loosen the rules. On Tuesday, the ministry said it would allow property owners to use empty spaces in buildings for temporary storage, bringing goods closer to customers.

At present, Askul ships goods from nine distribution centers across the country. Many customer orders are too small to fill an entire truck, raising the cost of deliveries. Around mid-July, Askul and courier Sagawa Express will begin testing a system in which office supplies are stored at parcel collection points beneath the Tokyo Midtown commercial complex in the city's Roppongi district. Later, Askul plans to expand its network of small warehouses, mainly in central Tokyo.

The office supply company will bring big-selling products to the collection point. From there, Sagawa will take over, bringing the items to customers' offices by cart, for example. Items likely to be stored at the parcel collection points include photocopy paper and toner. Using previous order data, the company believes it can determine the optimal inventory for each of its small urban warehouse spaces.

Items not kept at the collection points will be delivered from larger distribution centers, as before. If there are not enough orders to fill a truck, the vehicle will be loaded with higher-volume items stored at the Tokyo Midtown site.

For Sagawa, too, which handles logistics for the entire complex, the new scheme will ease the workload of its cargo handlers. Tenants, meanwhile, will get faster deliveries. Some items should arrive within an hour after the order is placed.

Business clients are important for Askul, accounting for about 80% of its online sales. It uses both own delivery network and outside couriers, but rising shipping costs have become an issue, especially after industry leader Yamato raised delivery fees for corporate customers. Online retailers are also locked in a fierce fight with Amazon.com, which has a formidable logistics operation.

Another challenge for couriers in the era of online shopping is the cost of repeat deliveries when the customer is not there to receive the goods. Yamato Transport plans to install storage lockers where customers can pick up items in 5,000 locations by next March, including drugstores and train stations. Web retailer Rakuten and Japan Post Holdings have begun allowing customers to pick up their parcels at some 20,000 post offices across the country.

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