E-commerce was responsible for more than half of overall retail gains in 2019. In the first quarter of 2020—while stay-at-home orders kept most people at home—online orders grew 129% year-over-year in the United States and Canada. Even as states reopen or roll out phased reopening plans, 36% of consumers say they won’t return to in-person shopping until a COVID-19 vaccine becomes available. As these consumers fall into comfortable online ordering habits, e-commerce will likely retain some portion of the retail market share it has gained even after a vaccine reaches the market.
During a time of rapid and unexpected growth for the e-commerce sector, industrial real estate space is at a premium. The success of an e-commerce operation depends on the ability to ship items quickly and reliably from conveniently located distribution centers (DCs), which makes the lack of primary market fulfillment space problematic. Meanwhile, a construction slowdown caused by the coronavirus pandemic ensures that capacity will remain tight for some time to come.
Finding Space When There is None
To benefit from the continuing growth trend, e-commerce retailers must find innovative ways to locate their products near target markets. While ready-to-go, full-scale fulfillment centers might not always be available, that doesn’t mean options don’t exist in terms of distribution space. Here are some ways e-commerce businesses can enhance their fulfillment footprint:
- Open multiple smaller DCs. If a single location isn’t available at a convenient central location, consider splitting the fulfillment operation can into several more modest facilities. Spreading the distribution footprint over several markets creates significant advantages, potentially including faster shipping to multiple markets, lower shipping costs, and the ability to experiment in new market locations. Multiple sites also mean your workforce is more disbursed lowering the risk of COVID-19 shutting down your operations.
- Look for commercial space. Every major city has empty retail spaces left behind by brick-and-mortar stores that went out of business. The COVID-19 pandemic also caused many businesses to distribute their workforces and let their office leases expire. When industrial space isn’t available, it’s sometimes possible to find available commercial space with the correct zoning approval and convenient enough location to suit distribution needs.
- Look up. A traditional warehouse typically spreads goods over a wide footprint, but many have high ceilings and substantial unused space above the racking systems. Many distribution experts have found value in building up instead of out, using combinations of higher racking systems, elevators, automated storage and retrieval systems (ASRS), and more to move and store goods.
- Use a pop-up warehouse. For businesses that need additional space right now, temporary pop-up spaces might offer a sufficient stop-gap solution until more permanent accommodations can be found. Pop-up distribution centers—commonly referred to as micro-fulfillment centers—may range widely in form, from small disused retail spaces to trailers in parking lots. These micro-DCs stock in-demand items for quick distribution to the local market, taking some of the pressure off the company’s primary fulfillment location.
- Find a building nobody else wants. Every city has older buildings that have fallen into disuse. With some investment and dedication, these buildings can often be converted into modern fulfillment centers capable of handling expanded e-commerce needs.
Creative Warehousing Solutions From Phoenix Logistics
While e-commerce leaders undoubtedly have the expertise to drive sales growth, identifying a new fulfillment location and getting it up and running requires a different set of skills. If the company’s growth begins to outpace its distribution capabilities, that’s often a sign that it’s time to bring in a logistics partner to manage and streamline fulfillment activities.
At Phoenix Logistics, we excel at helping our customers find creative solutions to their warehousing challenges. We have access to nearly 30 million square feet of industrial space through our affiliate Phoenix Investors, a national commercial real estate firm located in Milwaukee, Wisconsin. Our portfolio of warehousing and fulfillment real estate spans 22 states, and we have teams standing by to rapidly bring new distribution centers online.
Contact us today to see how Phoenix Logistics can help you overcome your warehousing challenges.
As an affiliate of the real estate firm Phoenix Investors of Milwaukee, WI, Phoenix Logistics has unique and preferential access to an expansive portfolio. Phoenix Investors’ Senior Management includes Frank P. Crivello as Chairman & Founder; David Marks as President & CEO; and Anthony Crivello as Executive Vice President. Robert Kriewaldt serves as Phoenix Logistics’ Senior Vice President.