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E-commerce and logistics: How important is e-commerce

E-commerce and logistics: How important is e-commerce?

In a recent presentation on e-commerce and logistics by John Slang, several important insights were shared about the relationship between these two sectors. Contrary to popular belief, e-commerce is not an entirely independent asset class but rather a strong component of the overall global logistics asset class. While e-commerce is growing rapidly, traditional logistics still plays a significant role in the industry.

One interesting observation from the presentation was the emergence of a new trend known as the Omni Channel. This trend involves traditional retailers transitioning from pure retail to a combination of both e-commerce and traditional retail. This evolution in logistics is reshaping the way warehouses operate and has been a significant driver of demand across Europe. It is crucial to differentiate between the pure play e-commerce players and the retailers adopting the Omni Channel approach.

The presentation also shed light on the challenges faced by retailers in designing their supply chain to accommodate the e-commerce component and make it profitable within their overall retail sales. Location choice and supply chain configuration have become key areas of focus for these retailers. However, despite the challenges, the growing e-commerce trend is expected to drive strong demand in the future.

E-commerce is not just a temporary driver for take-up logistics space; it is viewed as a structural driver for logistics demand. As a relatively young trend in the industry, e-commerce companies are constantly adapting and reinventing their supply chains. Valuable lessons can be learned from other markets with higher internet penetration, such as the US. Concepts like satellite warehouses, reverse logistics, and proximity to consumption centers are gaining importance in the e-commerce industry.

Interestingly, e-commerce is not limited to large-scale operations or massive warehouses. Last year, a significant percentage of leases (eight percent) were for e-commerce operations in standard logistics buildings, ranging from 20,000 to 40,000 square meters. This dispels the notion that e-commerce is exclusively for big players. While e-commerce is a popular topic of conversation, it still represents a relatively small component (five percent) of the total logistics market. However, its growth potential is undeniable, and the influx of investments into the industry demonstrates its importance.

Keywords

E-commerce, logistics, global logistics, asset class, Omni Channel, traditional retailers, supply chain, profitability, location choice, supply chain configuration, demand, structural driver, satellite warehouses, reverse logistics, consumption centers, market growth, investment influx.

FAQ

  1. What is the relationship between e-commerce and logistics?

    • E-commerce is a strong component of the overall global logistics asset class. While e-commerce is experiencing rapid growth, traditional logistics still plays a significant role in the industry.
  2. What is the Omni Channel approach in logistics?

    • The Omni Channel approach refers to traditional retailers transitioning from pure retail to a combination of both e-commerce and traditional retail. This new trend is reshaping the way warehouses operate and driving demand across Europe.
  3. What challenges do retailers face in incorporating e-commerce into their supply chain?

    • Retailers often struggle with designing their supply chain to accommodate the e-commerce component and make it profitable within their overall retail sales. Location choice and supply chain configuration are crucial factors they need to consider.
  4. How is the e-commerce trend viewed in the logistics industry?

    • E-commerce is viewed as a structural driver for logistics demand rather than just a temporary driver for taking up logistics space. It is a young trend that continues to evolve, with valuable lessons being learned from markets with higher internet penetration.
  5. Does e-commerce only benefit large-scale operations?

    • No, e-commerce is not limited to large-scale operations. In fact, a significant percentage of leases last year were for e-commerce operations in standard-sized logistics buildings. This highlights that e-commerce is accessible to various-sized players in the industry. However, it still represents a relatively small component of the total logistics market at this stage.