Internet Retail transforming Logistics Services

Jones-Lang1Global online retail has grown 14.8% on an average per year from 2007 to 2012 and the total B2C eCommerce sales are expected to exceed USD 1.2 Tn this year alone, as recently analyzed by Jones Lang LaSalle, a Chicago based investment management company with specialization in real estate.

As per the report, eCommerce is growing particularly in developing economies like India and China, due to rapid online growth. Also, the development of new eCommerce logistics models, will drive changes in physical distribution networks.

Online retail sales as a percent of total retail sales in 2012

In developed eCommerce markets, online retail sales typically account for between 5% and 15% of total retail spending, and per capita online spending is relatively high. The top three countries include UK, US and Australia.

Among the developing countries, India’s online retail shares of the total retail sales in 2012 were the lowest, holding less than 1%, with China and Japan taking the leads.

It will be good to note that online retail only accounts for 4% of the total global retail sales—meaning there is an enormous opportunity for growth in this sector.

Also, markets vary greatly between countries, especially between developed and developing nations. Although U.S. will remain the largest B2C eCommerce economy in 2017, China will move into second place and substantially close the gap.

Emerging new types of Logistics facilities in developed countries

The new logistics and distribution models will give rise to logistics properties like, mega e-fulfillment centers, parcel hubs and delivery centers, local ‘urban logistics’ depots for rapid order fulfillment, and returns processing centers.

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At mega e-fulfillment centers, merchandise is stocked and picked at item level whereas at parcel sortation centers (hubs), parcels are sorted before being forwarded to local parcel delivery centers. These act as last mile fulfillment centres. To ensure rapid order fulfillment particularly to service major cities Local urban logistics depots are being used.

Another new class of distribution property is returns processing centers, which handle purchased items that customers decide they do not want.

As per the report, the next evolution for multi-channel retailers in developed markets will see them move from multi-channel to omni-channel.

Emergence of eCommerce logistics in developing countries

In China, the first wave of eCommerce take-up of warehouse space was concentrated in Tier 1 cities such as Beijing, Shanghai and Guangzhou. Talking about Brazil, the boom in eCommerce has created new demand for warehousing, particularly in São Paulo, its main logistics market.

In India, on the other hand, online retail currently accounts for less than 1% of total retail spending. According to the report, the country’s multiple tax structure has encouraged decentralized warehouse networks with relatively small state-based facilities, rather than larger facilities.

However, its expected that the implementation of a Goods and Services Tax (GST), will change this by encouraging the consolidation of distribution networks, which will grow the demand for larger distribution centers.

To read the complete report, click here

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  • Ryan Turbill

    The Service Provider needs to understand the operational needs first.
    The foremost thing is getting the products to its customers as soon as
    possible and in perfect condition. Doing business in the right manner is
    the prime objective. This includes keeping customers happy, offering
    apt business solutions for their future prospects and showing the right
    path towards a streamlined process.