Cyber Monday: How Location Intelligence Facilitates E-Commerce Fulfillment November 26, 2018 Commercial Real Estate, Location Intelligence By: Jason Holte Share: TwitterFacebookLinkedInEmail As e-commerce continues to reshape consumer behavior, what emerging logistics solutions would receive a boost from location intelligence? Last week, we examined the evolving state of the retail industry and how location intelligence can help businesses be Black Friday-ready. In honor of Cyber Monday, we’re taking a look at a few ways that retailers are adapting their practices to meet the rising demand for improved fulfillment processes. E-commerce has not yet completely replaced in-store shopping, but consumer spending online is still growing at a rapid pace. Consider these figures from Black Friday and Cyber Monday last year, for example. According to Adobe’s 2017 Black Friday/Cyber Monday recap, Cyber Monday spending grew 17% year-over-year in 2017 to a new high of $6.6 billion, and online spending on Black Friday alone reached $5 billion. With online sales expected to continue to grow in years to come, it is imperative that logistics and fulfillment models continue to evolve to meet the growing demand. Let’s explore a few ongoing and emerging innovations in this field and evaluate how location intelligence plays a role in tying these processes together. Urban Fulfillment and Last-Mile Distribution Per Cushman & Wakefield’s 2018-19 North America Industrial Forecasting Report, e-commerce-related industrial leasing now makes up as much as 25 percent of the industrial leasing market in the United States. To keep up with the e-commerce boom, retailers are identifying ways to cut costs when it comes to storing inventory for distribution. That’s where last-mile facilities come in. According to the same study, it can cost anywhere from $3-6 per square foot to store goods at a retail facility, but at a last-mile facility, these costs drop under $1. With a quarter of the industrial leasing market already dedicated to e-commerce and continued adoption of the last-mile retail distribution model, it’s critical that commercial brokers with a heavy retail portfolio are equipped to identify new distribution center locations for their clients. Otherwise, they risk missing out on valuable opportunities. The Rise of Adaptive Reuse Another way that retail and e-commerce companies are seeking to address their urban fulfillment needs is through adaptive reuse — the conversion of older, functionally obsolete spaces into fulfillment centers. Cushman & Wakefield’s report notes that as a trade-off for optimal locations, these companies are willing to consider smaller facilities than they would ordinarily develop into fulfillment centers. On average, according to the report, these “service-level depots” need only be roughly 10,000-40,000 square feet in size. This means that industrial space that traditionally would not be suitable for e-commerce or retail distribution may now be an attractive proposition for these companies, as long as it’s located near a major metropolitan area. As a result, brokers must be able to surface these opportunities for their clients. The Logistics of IoT Technology To meet the increased demand for fast, accurate deliveries, it’s no surprise that logistics companies are beginning to turn to the internet of things (IoT) to streamline their operations. DHL, in particular, is pioneering expanded IoT data use in their day-to-day operations, using technology to streamline everything from operational efficiency to employee safety. These efforts began on a trial basis in 2017, and a key component is the integration of data from detectors placed on vehicles, the logistics company’s yard management system, and an app used by drivers. By marrying this data together, the delivery giant hopes to cut the average time trucks spend waiting in half. Measured against the sheer volume of deliveries made by DHL annually, the success of this program could dramatically improve the company’s fulfillment timelines. How the DMP Platform Streamlines E-Commerce Fulfillment A strong location intelligence platform can help commercial brokers identify optimal fulfillment center locations for their retail and e-commerce clients. In fact, our map-based real estate application, LandVision, is perfectly suited to the task. LandVision allows brokers to search for properties that meet base requirements such as minimum acreage or square footage of onsite buildings, land use and zoning, and proximity to major roadways. It also provides complete ownership information for any property under consideration. Brokers can create a trade area to highlight the characteristics of an area within a specific drive time from a property. They can also conduct a detailed demographic analysis of the surrounding area to determine if the local community aligns with a retail client’s target market. LandVision even enables brokers to automatically generate reports to present their findings to clients. Logistics applications can also be optimized with the help of location intelligence. Using our SpatialStream web service, location information can be streamed into apps in real time. Because this information is continually updated, drivers, supervisors, and other personnel will have access to the most current location information any time they open their app. By combining this with data from IoT sensors in their fulfillment centers, logistics companies could dramatically expand their understanding of their supply chain and identify additional time-saving opportunities. Ready to Learn More? We’d love to show you why over 20,000 real estate professionals trust the DMP platform to help them find off-market opportunities and win more deals. Schedule a demo today to see firsthand how LandVision streamlines property analysis, or contact us for more information on SpatialStream.