The rapid growth of e-commerce has been a boon for the logistics industry. Large consumer market areas have experienced rapid industrial expansion to accommodate the need for additional warehousing and distribution space to keep pace with the demands of large population centers. These efforts have largely been carried out, facilitating fast and cheap delivery to nearly all large U.S. urban areas.
With this first phase of development complete, logistics stakeholders are now looking to real estate in secondary markets to further increase capabilities and reduce costs. With most distribution assets strategically located near large urban centers, e-commerce retailers have been forced to swallow the cost of reverse logistics operations. Online shoppers return 25-30% of their purchases, forcing e-tailers to take notice of the distances packages must travel. A lack of available space has also become an issue for many shippers.
Diversify and Conquer
Omni-channel and online retailers alike have begun seeking alternatives as industrial space dries up in primary markets and transportation and reverse logistics costs skyrocket. Affordable, available space in primary markets such as Los Angeles, Chicago, or New Jersey is now very hard to come by. As such, supply chain managers have discovered that strategically placing logistics hubs in secondary markets helps to address this growing range of concerns that currently plague their supply chains.
Renting space or contracting with a partner with available space in secondary markets offers a wide range of benefits, including:
- Fresh labor. There’s a critical labor shortage across the supply chain, making it difficult for warehouses and fulfillment centers to reach optimal staffing levels. Setting up a DC or working with a partner DC in a secondary market provides retailers with access to untapped labor pools.
- Faster shipping. Diversifying a distribution network to include locations near secondary target markets can significantly reduce transit times to these areas. Facilities can also be located strategically between primary and secondary markets to serve both. This is especially important in the age of Amazon, where consumers nationwide expect a maximum two-day delivery on the goods they purchase.
- Decreased costs. Real estate prices are substantially cheaper in secondary markets. In response, some retailers have begun to move away from primary market DCs altogether in favor of multiple secondary market facilities. In addition, shorter shipping times result in lower overall transportation costs.
- Available space. Availability is perhaps the largest benefit of locating distribution or storage facilities in secondary market areas. Primary market space is relatively full—and even if available storage and distribution capacity can be found, it won’t come cheap. Rural facilities tend to offer more square footage at a better value.
Gain Strategically Placed Logistics Real Estate with Phoenix Logistics
At Phoenix Logistics, we have dedicated significant time and resources toward the development of an extensive network of warehousing and distribution facilities that provide access to markets across the United States. We specialize in secondary markets like Dayton OH, Corinth MS, Rockford IL and Louisville/Lexington KY. Our facilities come fully equipped with a state-of-the-art Warehouse Management System and a dedicated workforce that is prepared to go the extra mile for our clients. We also maintain an extensive list of partners and contractors to ensure that we can provide our customers with tailored, single-source transportation and logistics solutions that help their businesses succeed.
Our services include, but are not limited to:
- B2B & B2C Order Fulfillment
- Cross Docking
- Site Selection
- Transportation Management
- WMS, including Web Portal Reports
If we don’t have a facility in the secondary market you need, we’ll help you find one. Our goal is to be a true partner that helps each customer to realize the full value of their supply chain. For more information about site selection or our warehousing, distribution, and freight brokerage services, please contact us online or call us directly at (414) 283-2600. To stay up to date on the latest news about our company and the logistics industry, please follow us on Twitter.