If it were possible to engage order fulfillment from a distance, then retailers would do it. However, there is no way around having close proxy warehousing if Same-Day Delivery is going to become a staple service within your online business. Amazon established fulfillment distribution centers strategically across the US and now providing efficient last-mile deliveries is quite easy. Many big name retailers are aggressively pursuing to follow the same blueprint, and as a result, warehouse space demand is rapidly increasing.
Retail Dive via Bloomberg recently reported that online retail is now accounting for 20% of warehouse space. This means that there is a more intensive effort to grow online, not just within a retailer’s physical store locations. Also, more start-up, web-based retailers are experiencing growth, which online retail has consistently increased in recent years. It has been forecasted that online retail would reach $500 billion by 2018. Therefore, the warehouse space usage is in line with the numbers and shoppers are more comfortable with buying online.
The article mentioned that the renting of prime warehouse space in the US rose 9.9% last year. It pointed out six markets that were among the nine with the biggest increases globally. Real-estate brokerage firm CBRE conducted the research and found that Oakland, California topped the list with 29.8%, which was seen also in Northern New Jersey. These are areas where strategic warehousing is becoming a hot commodity.
David Egan, CBRE’s head of industrial and logistics research for the Americas, discussed warehousing and the benefits of it with the Wall Street Journal earlier this month, “There are huge premiums being placed right now on being close to the consumer—speed of service, speed of delivery is a critical component of why people choose to buy from one retailer over another. To get the goods to consumers fast, you have to get close to them.” The closer the retailer, the better their service can be geared and the greater the options can be. With inventory a few miles away, retailers can replenish stores, correct error shipments and more, even offer same-day delivery.
This is exactly what Amazon has done with their order fulfillment centers and now have 27 major cities in which it provides same-day delivery to Prime members–for free. Eleven of those cities were established this year, including Sacramento, Stockton, Fresno, Louisville, Tucson, Milwaukee, Nashville, Charlotte, Cincinnati, Richmond, and Raleigh. To offer this type of fast delivery for free, it was essential to have an optimal warehousing system in place.
Others will have to do the same if they want to thrive with a same-day delivery service model. Effective warehousing must be coupled with an effective delivery operation also. A Same-Day Courier like 1-800Courier is a viable option for retailers to partner with and establish on-time deliveries after they secure their warehouse space. The New York Courier has the courier expertise to develop sound same-day solutions, as shoppers and online retail itself begins to demand more from them.
Reference: 5.25.16, www.retaildive.com, Daphne Howland, Report: E-commerce growth driving rush for warehouse space