During this time of pandemic, a lot of people are purchasing essentials over the internet. This forced producers of goods to source for bigger warehouse capacity and at the same time, for companies to reconsider their chain of supplies. Since the pandemic started, sales online boomed by almost 40 percent and this was from May 26 to June 1.
The shift literally boosted both long and short term demands for industrial real estate properties that enabled businesses to deliver customer’s orders faster by being closer into their customer base. The US industrial leasing throughout the first quarter of this year was recorded to be at 3-year high and this only account for the start of the pandemic. eCommerce is only a part of the industrial leasing and yet, it is growing too. It has represented 11.8 percent last year while the preliminary data for 2020 showed that this figure has almost doubled at 20.8 percent as per JLL research.
According to Craig Meyer, the President of Industrial Brokerage:
The sudden growth of eCommerce, especially food, pharmaceutical and health products as well as consumer goods are happening in other parts of the globe too.
Emphasis on Supply Chain
Growth in demand for these online goods throughout the pandemic is stressing the need for rethinking elements of the supply chain management according to Meyer. Retailers might want to look for bolstering inventories of products with higher demand from this point forward.
He also said that it will be integral to build buffer stock to immediately meet surges in demands. To be able to offer timely delivery, eCommerce companies need to stock more inventory in facilities that are closer to their clients. Basically if you are thinking of putting up a business, this would be the perfect time. You can jumpstart your brand as you buy Instagram likes and be seen by the biggest number of customers.
The growth of orders for online groceries are also expected to continue likewise with the growth in US cold storage space. With both fulfilment centers as well as cold storage, complexity of doing direct-to-consumer facilities will need renovation or new construction.