e-Commerce and the Amazon Effect. Can we anticipate a shift in warehouse distribution to urban areas? What about temporary storage?
They call it the Amazon effect, essentially it refers to the way large e-Commerce companies, such as Amazon, disrupt traditional markets and business models and impact the entire retail “ecosystem” as consumer demands shifts. The pandemic resulted in significant accelerated growth of e-Commerce in Africa with countries like Kenya, South Africa and Mozambique experiencing a dynamic increase in warehouse development.
Amazon’s network is a logistics phenomenon that allows for the delivery of virtually any consumer goods to a shopper’s doorstep in a matter of days or even hours. e-Commerce providers have been under ever-increasing pressure to match Amazon’s speed and efficiency, and there is no evidence that consumer expectations are easing; a 2018 study in the US found that 43 percent of consumers surveyed expected “much faster” delivery times that same year, a sharp increase from 2017.
The Shift to Urban Warehousing
Some interesting trends around the way consumers are driving demand are emerging in the US as the demand for speedy delivery accelerates. Suppliers and distributors need to have goods stored and delivered to distribution centers close to where their clients are located. In the US and other countries, this means that Amazon and similar services are snapping up failed malls, schools and other buildings and using them as distribution points in urban areas. That’s where real estate comes into the mix.
When shoppers make a purchase on Takealot.com, they are given the option of delivery or collection at locations close to the shipping address. As more and more people order online, we can expect the retailing outlet to shift from “shopping center” to warehouse — but warehouses for storage may not necessarily be located in a traditional industrial hub.
Could we start seeing a trend from office and other commercial use to warehousing in city centers? What about on-demand warehousing? Many start-ups and smaller companies are making use of facilities like WeWork and Regus for temporary office leases. Could we see a click-and-store facility for distribution instead of long–term, single-tenant industrial warehousing? Perhaps we are looking at the short-term holding of goods driven by short-term demand. Many users of warehouse space do not want long-term leases in a period of inventory fluctuation and uncertainty. Predictions are that even South Africa’s big retailers will need immediate space for both slow and fast-moving goods while they assess their long-term distribution plans.
It will be interesting to see how logistics evolves in South Africa. But one thing is certain; e-Commerce is causing waves in multiple industries. For more information on the increase in e-Commerce in Africa read here: https://www.logupdateafrica.com/ecommerce-surge-fuels-demand-for-warehousing–supply-chain)