E-COMMERCE AND WAREHOUSE DEMAND EXPLODES POST-COVID

In a "new era" of ever-increasing e-commerce, the demand for easy online shopping has pushed warehouse and distribution centres to perform harder, better and faster. Warehouses face the need to keep up and improve their processes and reduce costs at the same time. The post-COVID e-commerce boom has resulted in customers' demand increasing in terms of service delivery as well as delivery cost. We've highlighted how the demand for warehouses have adapted and changed since the pandemic, with ideas on how warehouse owners or investors can improve their offering to deliver a better service for today's demands.

LOCATION, LOCATION, LOCATION

Gone are the days where warehouses were built on the outskirts of a town or city. Nowadays, proximity and fast delivery to their customers are crucial for businesses. The closer you are to your customers, the more you cut on costs and time or even deliver for free. These factors are pushing the demand for warehouses to be closer to urban areas and customers.

BUYING PATTERNS

Warehouses might find it difficult to keep up with the unpredictable, seasonal demands and buying patterns of the online market. This will be an ongoing issue as e-commerce continues to show that things aren't slowing down any time soon, which often leads to over-or-understocking of products.

Distribution centres need to start using the right technology to keep up with the fulfilment of orders and data should be regularly updated to ensure customers have a pleasant and convenient online shopping experience.

BULK VERSUS SINGLE ITEMS

In the past, warehouses would focus mainly on buying in bulk and selling in smaller bulk quantities.  E-commerce demands that much smaller batches or even single items should be available to buyers. This has caused a huge shift in the market and distribution centres have had to adjust accordingly.

Warehouses are growing accustomed to packing daily and shipping small batches or single items -this had become the norm. To smooth out this process even more and ensure a better experience for clients, warehouses should invest in systems like inventory management and warehouse mobility.

WAREHOUSE TECHNOLOGY

Because of the continued growth and greater consumer demand for e-commerce, many warehouses and distribution centres are using technology to help work faster and more efficient. It has become necessary for them to tap into sensors, robotics, automation and computer storage to ensure they stay ahead of the game.

RETURNING OF GOODS

Consumers not only require and demand a speedy and convenient online shopping experience, but also the opportunity to return the item with the same ease if necessary. This means the warehouse should be able to efficiently manage the transaction both ways and is one of the major challenges e-commerce has brought to the warehouse industry.

Returned goods (also named reversed logistics) add to additional labour costs and valuable warehouse space.  As this concept is relatively new to the industry, not all distribution centres are ready and geared for it. The time to adapt for this process is now.

OPERATION 24/7

We are living in a fast-paced world and with e-commerce the market is always open for shopping.  This leads to a 24/7 demand from the customer to deliver the goods as soon as the next day after shopping online, which means warehouses must process orders overnight and deliver the items the next day.

This work pattern is now a normal routine in larger warehouses and distribution centres, most of which are still in industrial areas.  It can, however, become an increasing problem and concern in residential areas, when 24/7 activities risk disturbing residents and also cause traffic congestion with a warehouse close by.

E-commerce in South Africa has only been around for a relatively short time compared to countries like the USA, but its impact has already brought significant changes to the warehouse industry. It's here to stay and will become even more demanding with time. It's also an extremely exciting time, as it means that the warehouse property market is booming, making it the perfect time to invest or sell your industrial property. To learn more about warehouses that best serve the e-commerce industry in your area, get in touch with one of API Property Group's expert industrial property brokers today.