How small, diverse, and female-led e-commerce businesses are finding warehouse space

Saltbox CEO Tyler Scriven on the massive, untapped small business logistics market

There are roughly 718,000 direct-to-consumer e-commerce merchants in the U.S. with less than $5 million in annualized revenue, and growing at roughly 15% per year.

That’s the target customer of flex warehouse (also known as co-warehousing) company Saltbox, which tells CNBC it is seeing continued growth in warehouse demand from small and medium-size businesses.

“E-commerce is the predominant driver of this demand,” said Tyler Scriven, CEO and co-founder of Saltbox. “There’s a massive market opportunity here to serve their warehouse needs.”

Nearly 75% of Saltbox’s 700-plus business customers are led by women or people of color; more than 70% are e-commerce companies selling their physical goods direct to consumers in categories from fashion to tech, home goods, health and beauty.

“Our economy is increasingly driven by logistics, our retail economy in particular, and that works in the favor of large companies,” Scriven said.

Warehouse demand is far outpacing supply in the current market and driving up prices.

Scriven encountered the logistics challenges entrepreneurs face when running his own small business with his wife. The space he was using to store and ship his company’s products was not efficient, and working conditions were not acceptable for employees. The need to offer business space within warehouses for small and medium-size businesses is part of the reason for Saltbox. Small businesses can find themselves operating out of a garage, basement, or even self-storage facilities, and need an environment that can spark innovation and inspiration, Scriven said.

“Small and medium-size business owners take a lot of pride in their work and when you integrate their office operations on site, it is life-changing,” Scriven said.

He said Saltbox’s is projecting roughly 4x revenue growth this year and estimates the total market it can serve may be as large as one million businesses.

Saltbox doubled in size in 2022 and last November secured $35 million in a series B venture funding round. Its investors include Cox Enterprises and Pendulum, an investment and advisory firm dedicated to funding founders of color. 

The company recently opened its eleventh co-warehousing location, near Columbus, Ohio, a location Saltbox says allows customers to reach roughly two-thirds of the U.S. population with two-day shipping. It also has facilities near Atlanta (where Saltbox is based), Dallas, Denver, Miami, Los Angeles, Miami, Minneapolis, Phoenix, Seattle, and Washington, D.C., and plans for additional Arizona and Florida locations.