Warehouse Industry Growing because of Same-Day Delivery

Warehousing is what retailers have come to grips as a vital part of having success with Same-Day Delivery. This is something Amazon had in mind when it strategically planted state-of-the-art order fulfillment centers throughout the US. As a result, the e-retail leader is driving a trend online with fast delivery that must have close proximity warehousing to work. Now, more retailers are renting warehouse space and the numbers show it.

Retail Dive reported via Bloomberg that online retail is now accounting for 20% of warehouse space. Also, 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 worldwide. Oakland topped the increases with 29.8%, which was seen also in Northern New Jersey, according to real-estate brokerage firm CBRE.

David Egan, CBRE’s head of industrial and logistics research for the Americas, told 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.”

Amazon is driving the surge in warehousing within the retail industry resulting from same-day delivery expansion. The retailer leader launched 11 more major US cities to its' free same-day delivery program. Those new cities included Sacramento, Stockton, Charlotte, Cincinnati, Fresno, Louisville, Tucson, Milwaukee, Nashville, Raleigh, and Richmond. With a total of 27 service cities, Amazon is on pace to eventually provide same-day delivery nationwide, solely enabled by its distribution systems and warehousing.

Centrally-located warehousing won't due when it comes to same-day delivery. This use to be the model for distribution until the weigh in of e-commerce and the ability to scale operations fast. Online retail is projected to reach $500 billion by 2018, which means there will be a heavy emphasis on how close can a retailer get their products to customer markets. Brick-and-mortar retailers use their store locations as warehouses and partner with a Same-Day Courier like A-1 Express to fulfill online order deliveries. With a New Jersey Courier that has a national footprint and leading courier technology like this, it helps retailers create the competitive advantage they need.

When demand spikes upward in specific markets, a retailer can quickly implement a same-day delivery solution there. With last-mile deliveries, just having a solid warehousing system in place isn't enough. It has to be coupled with online order fulfillment supply chain to get customer purchases to their front door. Indeed, same-day delivery is expected to reach $987 million by 2019, which will result in the inevitable growth to be seized by a company. The one with the right delivery outfit will be the one that keeps the business. Google, Amazon, Whole Foods, Macy's, and more have jumped into offering a fast delivery option and others should do the same.

Reference: 5.25.16, www.retaildive.com,Daphne Howland, Report: E-commerce growth driving rush for warehouse space