Booming Online Retail And The Expanding Demand In Warehouses

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Online retail stores have been facing a gigantic booming effect as lockdown restrictions continue to direct consumers to online shopping modalities. The increasing demand has led to an apparent investment in supply chain and logistics throughout countless global enterprises, sending e-commerce platforms on the lookout for bigger and more compatible storage systems. 

Though this shift was already expected throughout the next five years, this surging pandemic has speedingly compressed the process to take place in merely twelve months, challenging businesses to show efficient adaptation skills.  

Before the pandemic, the demand for warehouses was divided evenly between e-commerce and third-party logistic companies. Now, an approaching 45-50% paramount portion has been acquired by e-commerce. Consequently, many previous physical stores such as malls and auditoriums have transformed themselves into storage spaces and delivery preparation points. 

Whether dedicated to B2B (business to business) or B2C (business to customer) structures, warehouses do not only serve as inventory facilities, but also allow for convenient methods of material tracking and supply chain optimization. Amazon has confirmed an increase of at least nine new warehouses alone in New York City, marking the company as the country’s top urban delivery system. An estimate of 2.5 million packages are delivered daily, while statistics affirm the numbers are only prone to further growth. 

So called ‘receive centers’ are designed as transitory stations in the distributive process of a seller’s merchandise, while a new concept of ‘mini-warehouses’ is carried out by hired residents across Manhattan and Brooklyn. Over 1,000 individuals have already been assigned to the task, turning their apartments into retailer storage locations and personally dispatching packages for delivery. According to NY Times, having more closely located warehouses will be of indispensable importance for large retailers, and this homegrown strategy is yet another creative fit. 

Unfortunately, high delivery expectancy also comes with an environmental downside. As streets are filled with shipment trucks and other transportation, traffic and pollution skyrocket to a new level, forcing zoning rules to ‘ limit the construction of warehouses to designated manufacturing districts’ (NY Times).

On the other hand, economical benefits are a positive consequence of warehouse openings, generating thousands of well-paid employment opportunities. The worldwide clothing retailer GAP has announced a plan to invest $140 million to construct a warehouse in Longview, Texas, enabling for the processing of one million packages per day. The project completion is expected by late 2021, giving form to over 500 full-time jobs and 1,000 part-time opportunities by 2026. 

Other big scale markets such as Walmart, Macy’s and Target have likewise converted their previously opened stores into main hour distribution centers. According to Mint, managing director Anshul Singhal of Reliance Industries Ltd states  “the biggest demand for warehousing is coming (…) with same- or next-day deliveries, and no-questions-asked returns, and omnichannel retail taking precedence.’’ 

Canada’s largest cities Toronto, Vancouver, and Montreal are currently the strongest chains for industrial space in North America, states Bloomberg when sourcing CBRE. Wherelse this leads shall be revealed in the upcoming years, though it is certain that warehouse builders will continue to benefit from the rising demand.