Before You Commit: How to Test a New Distribution Market Without Getting Locked In
Expanding into a new distribution market presents a familiar challenge: Companies often have to make major commitments before they have enough real-world information.
Will regional demand last? How much inventory should be positioned there? Would a new location meaningfully reduce transit times? And how much warehouse space will the operation actually require?
Building or leasing a facility is not the only source of risk. A company may select a third-party warehouse only to discover that the provider requires a long-term agreement, a fixed amount of space or minimum volume commitments. If demand develops differently than forecast, the shipper could be paying for capacity it no longer needs.
Flexible warehousing offers another option: Test the market before locking in the footprint.
How can a company test a new distribution market?
A company can test a new distribution market by placing a limited amount of inventory in a 3PL warehouse and measuring actual demand, service improvements and operating requirements before making a long-term commitment.
The pilot might begin with a particular product line, customer group or geographic service area. As orders move through the operation, the company gains a clearer picture of how much inventory, warehouse space and transportation capacity the market requires.
“The biggest thing from a flexible standpoint is when a customer looks at us and says, ‘We’re not quite sure how much space we’re going to need in a market. So let’s test that out,’” said Ed Smith, Vice President of Distribution & Fulfillment at Averitt.
Rather than binding that customer to a predetermined amount of space or a long-term contract, Averitt can establish a standard operating procedure around the customer’s current requirements. The operation might involve pallet storage, floor-loaded freight, individual-unit picking, kitting or other value-added services.
If demand grows, the operation can expand. If the market develops differently than expected, the customer has room to adjust.
What is the risk of a long-term warehouse contract?
Warehouse agreements vary, but some require companies to reserve a fixed amount of space for a set period. That arrangement may work well when demand is stable and space requirements are well understood.
It can become costly when forecasts change.
If a company commits to too much space, it may continue paying for unused capacity. If it commits to too little, it may encounter overflow challenges, operational bottlenecks or the need to secure additional space elsewhere.
The timeline can create another constraint. A company may realize within several months that the market does not require the expected footprint but remain committed to the original agreement for much longer.
A flexible model allows space and services to more closely reflect what the business needs now, rather than what a forecast predicted months or years earlier.
What should a warehouse market test measure?
A market pilot turns assumptions into operating data. Companies can measure:
- Regional order volume
- Products most frequently ordered
- Required inventory levels
- Inventory turnover
- Warehouse space used
- Changes in delivery distance
- Transit-time improvements
- Transportation cost per order
- Seasonal demand patterns
- Customer service performance
The goal is not simply to prove that orders exist. It is to determine whether positioning inventory in the market improves the broader supply chain and whether the demand justifies a larger commitment.
Are your warehouses still where your customers are?
Customer geography does not remain fixed. Population, business investment and consumption patterns shift, while distribution networks may remain tied to decisions made years earlier.
According to the U.S. Census Bureau, the South grew 6% between April 2020 and July 2025, nearly twice the national population growth rate. It was also the only region to experience growth across every age group.
“You see population moving into the Southeast. You see consumers consuming more goods in the Southeast,” Smith said. “You want all your product to be closer to your consumers. It just makes sense.”
Nashville provides one example. While companies may traditionally think first of established logistics hubs such as Atlanta, Memphis or Chicago, Nashville offers access to growing Southeastern markets while also supporting distribution to the north and northeast.
The lesson is not that every company needs a Nashville warehouse. It is that distribution locations should be reevaluated as customers and order patterns move.
How is i5 Industries considering a market pilot?
Based in College Station, Texas, i5 Industries imports office furniture products and distributes them to dealers throughout the country. The company is exploring whether positioning inventory regionally could support future expansion and reduce transit times.
“Our future looks bright. We are really excited about expanding. Averitt is providing that opportunity for us through some of their distribution centers, allowing us to kind of pilot or test some areas to see if there is enough business in those areas. So we are seeing if we can reduce some of our transit times by utilizing Averitt’s fulfillment centers,” said Tara Laughter, president and CEO of i5 Industries.
The strategy remains under consideration, but it demonstrates how flexible warehousing can support growth planning. Instead of immediately signing a long-term agreement based on projected demand, a company can establish inventory in a prospective market, observe actual order activity and determine what type of presence the opportunity supports.
What should companies look for in a flexible warehouse network?
Companies evaluating a 3PL warehouse network should consider:
- Geographic coverage near current and prospective customers
- Flexible space and contract terms
- Inventory visibility across facilities
- Consistent operating procedures
- Inbound and outbound transportation
- Fulfillment and value-added services
- The ability to expand or reduce the operation
Averitt’s Distribution & Fulfillment network gives companies access to established logistics centers, port markets and regional distribution points across the South and Central United States.
Expansion does not always have to begin with a building or a multi-year commitment. Flexible warehousing allows companies to enter a market, learn from actual demand and make a larger commitment only after the opportunity has been demonstrated.
Forecasting still matters. But when customers are moving, sometimes the best way to evaluate a market is to operate in it.
See where flexible warehousing could support your next move. View Averitt’s Distribution & Fulfillment Center locations.
Flexible By Design. Scalable by Demand.