The growth of e-commerce is driving major changes in distribution centers, says Leber. Last year, the sector as a whole generated $250bn in sales, "and is still growing in double digits." The trend is also complicating the nature of warehousing itself, leading to a need for handling many more orders in real time, usually consisting of smaller quantities than was previously the case.
Both traditional retailers and internet-only merchandisers are responsible for the change. Half of the top e-tailers today are those with brick-and-mortar stores. At the same time, many smaller retailers are contributing to the mix. Last year, Leber says, around 170 retailers did more than $100m worth of business over the internet. "There were hundreds in that range," he adds.
In some cases, the entrance of old-style retailers into e-commerce is resulting in a multichannel approach. Some are trying to make the leap with legacy systems, some are outsourcing and others are seeking to build a fully integrated distribution network.
For many retailers, it has become too costly to pursue a policy of maintaining separate distribution channels. They would need to store inventory in at least two separate places. "The dream," says Leber, "is to be able to draw from the same pool of inventory for different needs, without incurring a high handling premium."
The task of integrating systems "can be complex and is sometimes overwhelming," says Leber. But many retailers have no other choice. As the growth of internet commerce levels off, companies will come under greater pressure to control costs. They'll need to invest in new systems and automation, he says.
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