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Evolution of e-commerce and its impact on industrial real estate

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by Praveen Gopal
1 January 2017

The global e-commerce sales have been growing at a pace of around 20% for the past few years. The robust growth in e-commerce has reformed the industrial real estate market. There is a rise in new class of logistics and distribution properties including mega e-fulfillment centers, parcel hubs and delivery centers for rapid order fulfillment and returns processing centers. 

Developed Markets:

In developed markets, the growth of online retail has been stronger in sectors such as fashion, electrical and ICT goods, as compared to food. The e-commerce logistics models have led to a wave of new demand for different types of logistics facilities.

1. Mega e-fulfillment centers are operated by retailers or logistics service providers. They range from 500,000 sq. ft to one million sq.ft in area

2. Parcel hubs / sortation centers sort orders by zip or post code to deliver to the relevant parcel delivery centers

3. Parcel delivery centers handle the final delivery to the customer.

Amazon is building the infrastructure to provide next-day delivery to virtually every household in the U.S. It currently has over 60 million sq. ft. of distribution space in the U.S. and plans to reach 90 million sq. ft. of e-commerce fulfillment space by 2016. In 2015, Walmart set up two e-fulfillment centers, one in Fort Worth, Texas with space of 800,000 sq ft and the other in Bethlehem, Pennsylvania with 1 million sq ft. It also utilizes its store network and its more than 130 distribution centers to ship online orders.

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