Global online B2C retail sales are increasing. This trend is spurring the need to locate e-commerce DCs closer to customers. Local depots for urban delivery are now needed more than ever. To be successful with e-commerce you need new logistics models which can provide rapid order fulfillment and returns processing.
Four Reasons 2014 Will Be The “Year of The Global Distribution Center”
Retail logistics has evolved to the point where companies now need to consider mega e-fulfillment centers, parcel hubs and delivery centers, local ‘urban logistics’ depots for rapid order fulfillment, and returns processing centers. They also must think about factors such as: internet penetration, fixed and mobile broadband costs, smart phone usage, demographics, the regulatory climate, the logistics and transport infrastructure, and industrial real estate options.
E-Commerce Fulfillment Centers and How They Do Site Selection
Strategic site selection drivers include workforce, service levels, transportation, cost, real estate, operating environment and more. In the US DCs are more likely to locate in states that do NOT tax internet sales, states with high levels of labor, full and part-time, states with right to work laws, states that house both air and ground UPS/FedEx hubs, states where “zone-skipping” is available to major population centers, states that offer real property or other tax incentives, and states with a robust FTZ program.
How is E-commerce Changing Distribution Center Site Selection?
One solution gaining traction among retail supply chain executives is locating fulfillment facilities closer to their customer base in order to meet service commitment goals such as aggressive delivery schedules. Based on JLL’s Big Box Outlook report,demand for “big box” space (warehouse and DCs that exceed 250,000 square feet) is also growing in secondary major distribution and population hubs such as Indianapolis, Memphis, Phoenix, and Houston as traditional tier-one markets such as Chicago, Atlanta, and New Jersey have become more congested and their supply scarce.