It’s an e-commerce world

With news coming out earlier this week, that retail giant Wal-mart plans to sell its China-based e-commerce business to JD.com, it stands to reason that this news was not a complete shocker.

Instead, one can likely make the case that it is just the next domino to fall in the world of e-commerce, and subsequently e-commerce-based supply chain and logistics operations, which continue to develop, morph, evolve, and change all at once with seemingly lightning-like speed.

In the news regarding Wal-mart, it appears to be a move based on its need and desire to bolster its share in the Chinese e-commerce market, one that is largely dominated by Alibaba, much like the influence Amazon has here in the U.S.

That is all good and well, but at the same time is not the driver of this column. Instead, it has more to do with e-commerce continuing to change how the supply chain and logistics game is played.

To be sure, we have all gotten a glimpse of the playbook, what with free shipping, or at least next-day, or two-day becoming in many ways, the norm, due to (perhaps) impatient customers who “must” have their online-ordered items delivered as quickly as possible.

Compound that with changing consumer buying habits, increased e-commerce activity via smart phones, people not wanting to go to the mall and just sheer ease of use, and it is really no wonder the game continues to change––and quickly.

And it is clear that retailers are listening. I mean, they really have no choice, right? That was made abundantly clear in the recently-released fifth annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

One of the survey’s top findings was that-based on feedback from 5,330 avid online shoppers that made at least two transactions in a three-month period-51 percent of respondents’ purchases are now being made online and continuing a trend that has been intact in recent years.

“It is really a continuation of the trend of the last three years, which came in at 47 percent, 48 percent, and now 51 percent and speaks to the way retailers are embracing online shoppers and also the increased usage of smart phone and tablets for shopping,” said Louis DeJianne, UPS Director of Consumer Goods and Retail Marketing, in an interview. “Retailers have really made that process easier, and people are becoming more acceptable of the checkout process and making online payments. As the retailers make this process easier for consumers, they will gravitate to it more.”

It is also becoming more and more clear that e-commerce continues to affect the industrial real estate market, too, based on data by industrial real estate firm JLL.

The Chicago-based realtor made that clear in recent data highlighting market conditions for the first quarter of this year. Perhaps the most telling statistic was that the first quarter vacancy rate checked in a 6.2 percent, which stands as a 16-year low and below the previous cycle’s low point of 7.4 percent in early 2008. And even with 131 million square-feet of new spec construction coming online in 2016, JLL said that vacancy rates could remain in the low 6 percent range through the end of the year.

To a large degree, these rent and vacancy numbers are being driven by e-commerce gains in tandem with “last mile” delivery supply chain-related changes and improvements and changes in warehousing and distribution as they relate to e-commerce, too.

“E-commerce across all regions of the world is still a double-digit digit growth business, and we have seen the thin line from us as consumers, as well as retailers aligning supply chain and industrial real estate to support the e-commerce platform and that has not changed at all,” said Kris Bjorson, International Director and leader of JLL’s Retail Distribution Service business, in a recent interview. “The same type of pent up demand is out there and the type of demand has changed a little bit, too, because as Amazon and walmart and some of the larger retailers reach what I call maturity at the mega fulfillment center level (1million square-foot) facilities and larger they are seeing focus on the other nodes of it.”

As e-commerce continues to grow at its rapid clip, supply chain and logistics changes and developments will continue. To what degree and at what pace can be hard to peg, but even money bets it will be fast and furious.