Are you a warehouse that handles logistics primarily for brick and mortar stores? How easy is it to transition to online warehousing?
Look no further than Walmart and Amazon to see the differences in services for customers when shopping in a physical location vs. a virtual shopping spree. Walmart has the advantage of both brick and mortar and an online presence. According to a blog post on eTail, the company that holds retailer-driven trade shows and annual meetings, Wal-Mart tried unsuccessfully to duplicate what Amazon does with Prime, ($99 per year for free next-day delivery on every Amazon purchase) but its customers aren’t engaging. Never mind the free overnight shipping – Walmart has store pick-up!
Walmart has combined the physical and virtual shopping experience through its Endless Aisle concept in its stores. If customers don’t find what they want in the brick and mortar location, they can go to the kiosk at the end of the aisle and order it online, having it shipped direct to their home or to the store for in-store pick-up. This saves Walmart customers who may go elsewhere if they don’t find the inventory.
Keeping up with the hybrid models of combining brick and mortar with online shopping will be a challenge for most traditional warehouses. Many of today’s warehouses are not equipped for online distribution. Most of the warehouses built before the year 2000 are inadequate for online warehousing, but they were, and are, ideal for physical store sales. For online, the ceilings are too low to handle the volume of inventory of a single SKU. In addition, the warehouses are lacking necessary square footage to house large quantities of product. There are warehouse products that are good investments to modify these physical restrictions. The newest rack systems and shelving systems use every bit of warehouse space possible. Combined with the right automation package, the warehouse can get closer to the quick turn-around expected for online sales.
As in the U.S. housing market, the key to successful online warehousing is location, location, location! Those warehouses that are away from urban and suburban build-out are the ones who have the space to expand. They also have the opportunity for lower expenses, employment salaries and taxes. However, with necessary delivery speed, it is better to be located near a more populated area to “ensure” rapid last mile delivery, according to an article on Datex Corp.’s website.
Warehouses that are 40,000-60,000 sq. ft. in size are used for last-mile shipping. These smaller footprint warehouses are usually closer to urban areas. Baltimore ranks among the top 18 cities that have older warehouses located both in and near the harbor, as well as in more rural settings. The city reports 152.7 million square feet of space in 2,016 buildings. The average age of the warehouses in Baltimore is 38 years. Some of the more cosmopolitan cities like Seattle and Minneapolis are claiming the newer warehouses that incorporate technology and ability to handle online logistics. Space is necessary for the sheer number of SKUs available through online commerce.
So, during these down days of the pandemic, when online sales warehouses are hopping, plan your strategy to address online warehousing. Consider making modifications to increase your capacity and take advantage of the growth of online commerce. Prologis, a logistics research firm, predicts that online sales will make up 27 percent of all retail by 2024. It also estimates that ecommerce warehousing requires more than three times the space of brick-and-mortar stores per dollar of sales. Expand your warehouse capacity with updated fixtures. Contact Everything Warehouse’s professional design team to help you re-design your space for ecommerce warehousing.