E-commerce sales drive US warehousing and distribution projects

Although US retail sales have remained sluggish, but positive throughout 2011, retailers have noted much stronger online sales. For the first half of 2011, online retail sales were $75bn, a 13% increase over 2010. The economic environment, increasing use of smartphones, free shipping and the ability to research product reviews before making a purchase are among the reasons for the rise in e-commerce. To support online retail sales, many brick and mortar retailers are expanding their distribution facilities.

While many retailers such as Adidas utilise mega-distribution facilities to support both online and in-store inventory, other retailers are building separate, more specialised facilities to support their e-commerce division. For example, after experiencing a 50% increase in online sales in 2010, Kohl’s recently opened its third distribution centre devoted to e-commerce. The new facility is over 600,000 sq ft, but the company plans to expand it by 2012 because of forecasted increased sales. Kohl’s anticipates online sales to increase to at least $1bn in 2011.

Other companies following Kohl’s lead includes Toys R Us, which recently opened a 300,000 sq ft facility in Reno, Nevada, Limited Brands and Walgreen. Also, discount retailer, Target announced it was taking full control over its e-commerce business from Amazon.com and is seeking to build up to a 1.2m sq ft distribution centre in the US Southeast.

After reporting a slight decline in net profits, Lowe’s announced plans to focus on online sales because of higher transportation costs, due to fuel and ocean freight, as well as weakening sales. The company has also become more flexible on how it delivers items to customers from not only service stores, but regional distribution centres and from its dedicated internet warehouse.

As brick and mortar retailers focus more on e-commerce sales, Amazon.com continues to be the leader in online sales. For Q2 2011, the internet company reported that sales increased 51% over 2010 to $9.91bn. The company also plans to build 15 additional distribution facilities this year in anticipation of increased sales.

The US warehousing and distribution centre market is expected to see continued growth through this year and into next year as more retailers look to expand their e-commerce offerings. Expanding internet sales benefit shipping companies such as FedEx, UPS and USPS who deliver to consumers whereas trucking companies should also benefit as many deliver inventory to warehouses and distribution facilities.

Quelle: eyefortransport
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