E-commerce is exploding globally; sales reached nearly $3.5 trillion last year. The United States contributed about $340 billion — making it the second largest e-commerce market in the world, behind China.
The shift toward online shopping brought more than 9,300 brick-and-mortar store closings last year in the U.S. — a 59% increase from 2018 — along with a wave of new customer demands and expectations. Driven by Amazon, which rolled out free one-day delivery for Prime members last year, shoppers have become accustomed to near-instant gratification. More than 25% say they would abandon a cart online if same-day shipping wasn’t available, some research shows.
Meeting these service demands proves challenging for many organizations, as they lack the infrastructure and capacity network to meet shorter delivery times. This is requiring them to rethink their fulfillment strategies and invest in their operations.
Some are implementing automation, or reconfiguring warehouse layouts to enable employees to pick, pack and ship products more efficiently. Others are rethinking their approach to warehousing and fulfillment altogether.
Urban “micro-fulfillment” centers with smaller footprints than traditional distribution centers are popping up in cities nationwide, often in vertical form to maximize limited space, or as new subdivisions of already-established retail stores.
And to the contrary, a two-story, million square-foot DC is set to open next year in New York City.
Today’s e-commerce demands are pushing retailers to think beyond these walls, too, and offer cost-effective strategies for shipping goods to customers. (Alternative pick-up locations, including in-store pickup, is one increasingly popular example.) They’ll need to keep pace with the dynamic landscape — researchers say 95% of purchases will be made online by 2040 — or risk shuttering entirely.
Matt Huckeba is chief operating officer at Spend Management Experts.
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