Swell in Ecommerce Sales Fuels Demand for Warehousing and Distribution Services
The demand for warehousing has been increasing. The Wall Street Journal reported an increase in new leases or renewals of warehouse space by 43% just between April and May and year-to-date, a nearly 3% increase in warehouse leasing as compared to the first half of 2019. The rapid growth in ecommerce sales has fueled the demand. While the COVID-19 pandemic has hurt traditional retail sales, online sales have surged. Even as online sales taper off from a record high of $82.5 million in May as more brick and mortar stores open back up, the continued uncertainty about in-person shopping due to fluctuating regional coronavirus outbreaks means that ecommerce shopping remains a popular alternative. Since ecommerce sellers require 3X the space for inventory than traditional brick and mortars, the explosion in ecommerce sales has directly contributed to the increased demand for both short-term and long-term warehousing.
According to CBRE, even after the pandemic ends and demand weakens, warehouse leasing is projected to continue on an upswing over time due to the following factors: Ecommerce sales are expected to remain on a decade-long growth trajectory; larger retailers, seeing the importance of maintaining stock of high-demand products, have decided to outsource the storage and distribution of some inventory; smaller retailers have realized the benefits of incorporating ecommerce and partnering with third-pary logistics companies (3PLs) to store and distribute their products.
For ecommerce sellers and traditional brick and mortar retail companies that are looking to start or ramp up ecommerce sales, it’s important to find a 3PL distribution partner that has most or all of the following qualities:
- Successful experience as an e-fulfillment provider
- Ability to integrate existing ecommerce platform into WMS or create custom ecommerce stores
- Capacity to handle large inventories
- Scalable storage options to accommodate clients that experience seasonal fluctuations in sales levels
- Flexibility to handle overflow storage
- Strategic location in close proximity to most customers in US
- Various methods of transportation—including rail