By Amy Campbell
With a self-storage facility seemingly on every corner, standing above the crowd is a challenge in this industry. Offering ancillary products such as packing materials or free use of a company-owned moving truck has become commonplace. But there's another growing trend in the industry that takes the self-storage concept one step further: mobile storage. Whether offered as an ancillary product or used to expand an existing facility, mobile storage embodies the one thing everyone is looking for: convenience.
A New Market
"Three years ago, when we first introduced mobile storage, we were educating people about what the service is. Now, we find more of the people who call us already know what it is, so we're doing more selling of our containers than of the whole concept," says Dustin Deal, sales manager for Kontane Inc., maker of the HomePak, a wooden mobile-storage container.
Originally promoted as home- storage containers, mobile storage has recently been embraced by the self-storage industry as an ancillary product and marketing tool. "It's a market in the beginning stages that's really getting ready to take off," Deal says. Simply put, it's storage that comes to the customer. In the average scenario, a self-storage customer rents a truck, fills it, drives across town to the storage facility to unload, then returns the truck. With mobile storage, the container is delivered to the customer, who then packs it and uses a personal lock to secure it. When the container is full, a driver returns it to the warehouse for storage. The self-storage operator makes money by charging a rental fee on the container.
The customer-friendly concept is convenient, Deal says. "Now customers don't have to go out and rent a truck, try to pack all their items in it and move it in one day. Their other option is to go to a professional moving company, which is obviously not a cheap thing to do. Mobile storage lies somewhere in between," Deal says. "It takes the truck driving out of the process, but allows customers the option of packing the containers themselves. A lot of people feel more secure packing their own items. That's one of the main selling points."
Tim Riley, founder and CEO of Washington-based Door To Door Storage, says the mobile-storage market is still in its infancy. "It's much like the self-storage business was in the early 1970s, where there was a lot of product being built but the consumer hadn't figured what it was."
Mobile storage is another way for a self-storage operator to expand his market, says Chris Havener, president of Havener Enterprises, maker of the Pro Box storage vault. "A lot of companies look at adding truck-rental lines. But when you're a dealer for U-Haul, you're doing the work and they're making the money. This is another option," he says.
Box Trotters took the home-delivery storage concept one step further. The South Carolina company delivers containers to the customer, then arranges for the containers to be shipped across states via intermodal stack train. "It's actually a very high-quality method of transport and it's very economical," says company President Henry Cox. "Everyone is concerned about energy consumption and conservation these days. The fuel costs for the railroad are typically much lower than trucks, so it can be cheaper depending upon the shipment."
Box Trotters offers self-storage operators an alternative to purchasing and storing containers by enabling them to become agents. "We've been getting a lot of inquiries from mom-and-pop self- storage operators," Cox says. "Because they don't have the resources Public Storage and Shurgard do, they have no ability to sell the service. This gives them an opportunity to compete with those companies with very little investment. We support them with all the marketing, the brochures, the website enhancements. It basically is an adjunct to their existing self-storage operations," Cox adds.
Just as there are a myriad of self- storage facilities to choose from, there is also a variety of storage and shipping containers. Over the years, family-owned and operated Seattle-Tacoma Box Co. has designed 16 models of mobile-storage containers. "We went through quite a few before we found one that worked well," says Jake Nist, whose family has been making storage containers since the 1950s. "We've found a design customers seem pretty happy with, and they're withstanding the pickup-and-delivery and warehousing process pretty well."
Seattle-Tacoma's most recent invention is a cardboard, one-way container. "Basically, it gets shipped from point A to point B and gets disassembled at that end," Nist says. "It's allowed mobile- storage people to service more than just their local area. Now, they're able to move someone from point A to point B without having to worry about getting their containers back."
James Wayman, owner of Store to Door in Woburn, Mass., also sells a one-way storage container. The 8-by-5-by-7.5-foot box holds one-and-a-half to two rooms of furniture and up to 2,000 pounds. "The One-Way is self-contained, has no hardware and an all-weather, plastic sealer over it," Wayman says. It comes in an easy-to-assemble kit and costs less than $150. The container gives self- storage operators an alternative to the standard shipping vault. "It's just like selling supplies. You sell boxes for $8.95 or you sell a wardrobe box for 12 bucks. You can sell them the One-Way moving box to put their whole apartment in for $150 to $200," he says.
Havener Enterprises once used wooden boxes for its 250,000-square-foot warehouse. "But we didn't like them," Chris Havener says. "You had to cover them. They leak. They weren't as durable. So we started building the metal boxes for our own use." Havener now markets the Pro Box, a 5-by-8-foot box that can be assembled in 30 minutes. "The biggest advantage to our box is you don't need a cover for it and it's very durable," Havener says. Self-storage companies can also use the box as a marketing tool by slapping a magnetic sign on the side when it's out of the warehouse.
Kontane has found its product, the HomePak, a great success, partly because of it's versatility. The 7-by-5- by-8.5-foot container is constructed of exterior-grade plywood and a moisture-proof plastic lumber base that cannot rot, split or splinter. The HomePak also has a roll-up door and vinyl cover, making it ideal for storage use or as a moving tool. "It's a convenient concept," Deal says. "Once people try it, they like it."
From wood to steel to cardboard, the type of container you choose depends on several factors, including the purpose of the container, cost, equipment needed and available space. Many companies, such as Kontane, offer lease-to-own programs. Other products, such as the one-way containers, cost considerably less than wooden or steel vaults that average around $300. Unfortunately, most companies don't have a chunk of money to invest in containers and equipment. However, there is another avenue to consider. "You can start off on a small scale with 10 or 20 containers and work your way up," says Tom Moore, general manager for Florida-based Jacksonville Box and Woodwork Co.
The kind of equipment you will need highly depends on your facility, your existing equipment and the services you want to offer. For example, the one-way vaults only require storage space, whereas purchasing wooden or steel vaults will call for space and equipment. "Self-storage owners, if they're going to offer mobile storage, really need to research what all this entails," Deal says, keeping in mind that many self-storage operators are starting from ground zero. "Obviously, most of them don't have a truck. They would need some kind of flatbed truck to deliver the containers. And then they would also need the containers."
Start-up costs vary but can reach as high $2 million and are largely undefined in this market. "If you're looking at getting into this business, make sure you have plenty of capital. There's not a lot of off-the-shelf equipment," Riley says. In addition to the storage containers, a flatbed truck and forklift are necessities for moving and transporting vaults. There are also space considerations to hold the containers and equipment. "You need to consider the warehouse space. Are you going to lease or are you going to own it?" Riley asks.
Pricing is another factor. "Don't underprice the service," Riley warns. "I see a lot of people try to come in and price at the low end and charge self-storage rates. You need to charge double what self-storage rates are in a prevailing market." A 30 percent to 40 percent markup is reasonable, Riley says. "A lot of the costs that don't exist in the typical self-storage model do exist in this model. You've got a lot more labor, for one. In self-storage, you have one to two bodies to run a site. In our business, it could be up to 10."
Keeping the container to the industry standard of 5 feet wide by 8 feet deep by 7 feet tall, with a door on the end and a hinge on the left, could be a cost savings, Riley says. "There are huge benefits to standardizing the containers. One reason is you can share containers with others." The size of the containers really doesn't influence a customer, he adds. "Everybody seems to think, 'If I just had better containers than brand X or Y, I would get all the customers.' Well, it doesn't quite work that way," Riley says. "It's a people business. They buy from people--it's not because you've got a great container."
Taking a Risk
The start-up of a mobile-storage operation doesn't end after you purchase containers and equipment. "One caution to anyone getting into this business is he needs to promote the product and service well. In most areas of the country, the market is still underdeveloped," Deal says. A simple Yellow Pages ad won't be enough, he warns. "For self-storage, that's what they're used to doing. That's what they've done for years. Everybody knows if you need storage, you can look in the Yellow Pages and you'll find tons of ads in there," Deal says. "You can't do that with this because people don't know what they're looking for yet. It takes more of a hands-on approach in the market." Deal suggests forming key relationships with apartment managers or realtors in the area, direct mailing to people living in apartments or other interesting marketing ideas.
In other words, self-storage operators should take a proactive approach, Nist says. "You want to have a solid plan of attack, and a good business and marketing plan." Without them, seasoned operators say, it's unlikely mobile storage will become a viable commodity for your business. "The business model for this part of the industry is not yet proven like the self-storage business model," Riley says. "This business model is new and still in the research and development stage. Basically, that means you're at your own risk."
Although it's not an established market, Riley says the promise is there. "Customers love it. That's the bottom line. The next thing is now that they love it, can we make any money at it? That's still to be proven," he says. "The fascination and motivation for those involved in the business today is we know customers like it. We're all racing to prove a business model. And if you want to enter that race, just understand the stakes are high." But for forward-thinking self-storage owners, it's worth the gamble, Riley says. "It is definitely a niche that will absolutely be in the storage business 10 years from now. No question in my mind. There's just too much going for it."
Not all self-storage operators can afford the high cost of adding mobile storage to their existing services. However, there's another use for mobile-storage containers that not only has fewer up-front costs but can be just as lucrative. Portable self-storage units can be added to your existing buildings as additional storage. "Portable storage offers a lot more flexibility," says Johnny Green, owner and president of Portable Self Storage Inc. in Bonney Lake, Wash. "You can pick them up and relocate them, change the mix, sell them individually or relocate the whole complex to another site. You can't do that with conventional self-storage."
The 10-by-20-foot standard portable comes in an easy-to-assemble kit and looks identical to permanent storage buildings. "Our modules are designed so they can be assembled in place and trimmed, so the finished group looks like conventional self-storage buildings," says Terry Wellner, owner of Modular Mini Storage in Tualatin, Ore.
"Basically, it's an instant building," says Wayne Terry, marketing director for California-based Triton Mobile Storage Inc. "We take the containers and modify them to resemble a self-storage unit. They have multiple compartments and roll-up doors. It' an immediate way to grow."
Another advantage portables have over conventional storage is flexibility. "Frequently, portables can be placed where permanent buildings cannot--for example, on certain easements or setbacks, under power lines or where the maximum area of permanent building has already been built," Wellner says. "You can use them to fill in areas around your facility or place them along property lines to enhance security." Most portables are also climate-controlled and use little energy. "Our portables are high-quality structures just like our permanent buildings," Wellner says. Portables also offer the same amount of security as traditional storage buildings. "We use the same type of roll-up doors as other storage units so security is virtually the same," Terry says.
And the investment in portable storage can be considerably less than that of conventional buildings. "You can do it in phases--increments of one, two or 10 as you develop your market," says Green, who uses portables at his facilities in Washington and Canada. "You don't have that large capital outlay until you reach your absorption. In most new starts, there's a substantial amount of risk in the capital outlay, but also, you're betting on a market that may or may not be there. If it isn't, what do you do? Whereas, your options are always open with the portable units." One of those options is to sell them. "The portable lends itself to so many uses. It's a product that has a resale value. It can be sold to just about anyone--police departments, schools or churches," Green adds.