The e-commerce boom has definitely changed the way that many Americans do their shopping. Instead of going to their local mall or shopping center, a lot of people prefer to order online instead. This, in turn, has caused a number of companies to change their business models in order to keep up with the demand of online shopping. Here are some ways how:
1. Creating regional supply centers
When Amazon Prime was unveiled, it completely changed the way e-commerce operated and what customers expected. Next-day delivery went from being a luxury to something that was generally expected; in some cases, same-day delivery was even an option.
This change of delivery expectations created a need for more supply centers and logistical hubs around the country. Suddenly, major metropolitan areas across the United States needed their own supply centers in order to ensure speedy delivery to customers in their region. The goal is to deliver to every customer within two or three days, without neglecting high-quality service.
2. Higher employment rates
As the e-commerce industry grows, so does its need for employees to keep the warehouses and logistic centers running efficiently. As e-commerce’s market share grew nearly 16%, so did its employment. Approximately 5 million people are currently employed in logistics and warehousing, which is approximately a 12% increase in employment from 2015.
What this tells is us that the job market is currently changing alongside the demand for more efficient e-commerce services. This, in turn, creates a higher demand for industrial properties that specialize in transportation and warehousing services.
3. Big retailers are feeling the shift
Nobody is feeling the effects of a growing e-commerce industry as much as big retailers like Wal-Mart, Macy’s Inc., and Sears Holdings, which is currently experiencing a serious decline in sales. Now that e-commerce has become an effective alternative to visiting actual stores, brick-and-mortar businesses have been forced to find new ways to compete with online shopping. Companies like Wal-Mart and Nordstrom are among the big box retailers who’ve rolled out online shopping platforms to compete with Amazon’s market share, but the challenge is finding new ways to attract customers who’ve been loyal to Amazon and other online retailers.
4. There’s an increased warehouse demand
If there’s one sector that’s benefitting from e-commerce’s growing demands, it’s industrial real estate. Prologis Inc., one of the world’s largest industrial real estate companies, has increased its annual core funds by nearly 20% since 2015 because of a demand for warehouses. As long as online retail continues to outperform brick-and-mortar stores, this trend isn’t likely to slow down anytime soon.
Overall, e-commerce has become an efficient and effective way for people to shop in the comfort of their own homes. Surprisingly enough, online retailers actually tend to be less efficient in space usage than their brick-and-mortar counterparts. With that said, it seems as if many consumers prefer the convenience of online shopping over visiting stores in person. As e-commerce’s popularity increases, it looks like industrial real estate investors and logistic companies will be among the top industries to prosper.