E-Commerce Isn't So "E"

E-commerce is the modern Hannibal Lecter of real estate…or is it? We know that with every single item we could ever possibly need available online, conventional sellers have had to shift gears to remain relevant. This shift has trickled down into the property market, as many storefronts who failed to adapt to the modern era, and saw foot traffic slow, have closed down. However, while this may be tough for those who have stuck to their traditional retail methods, it has opened a door for new real estate sales: warehouses.

What is the worst part of online ordering?

The lack of instant gratification! You often have to wait several days, if not a week, for your item to get to you. Companies like Amazon have solved that problem by introducing two-day, one-day, and same-day delivery for many of their items, and many others are hustling to keep up with them.

How do online retailers do this though? 

At first glance, delivering an item quickly seems simple, but think about it. Getting an individual’s order to them on the same day they order it is a huge task, especially for companies that get hundreds or thousands of orders per day! Now this is where warehouses come in. If people aren’t going to come in close and pick up the item, bring the item closer to people.

How and why does this work?

So let’s just say that you live in an apartment in Hell’s Kitchen, and order a set of headphones off of Bose’s website. Now the company’s main operations are centered in Massachusetts, so there’s no way they’ll be able to provide you with the option of same-day delivery (at least not without having to hit you with the big bucks for it). However, if Bose invests in a warehouse full of product in downtown Manhattan, they can easily get your order to you within a couple of hours!

Though renting a warehouse located in an area of prime real estate might seem like a huge, unnecessary cost, this practice is on the rise. In this age, speed is expected in every aspect of life, and this certainly applies to delivery of product; you can’t meet expectations if gigantic regional warehouses are the only thing up your sleeve.

But…a warehouse? In the city? I smell $$$.

As we all know, space is one of the only things we can’t make more of, and is so limited in populated areas; therefore, a 25,000 square foot warehouse just isn’t realistic. But here’s the twist: you only need this space to temporarily hold product before it gets delivered, so it’s not as much storage space as it is a stop along the road.

For example, if your company makes 40 products, but you have 15 that are really popular, renting/buying a smaller warehouse to hold a temporary stock of those 15 products makes it possible for them to get to your consumers within the same day, boosting their happiness, your reputation, and at the end of the day, your sales!

This investment would, without a doubt, pay off in the long-term, as e-commerce is consistently increasing, and its peak is still quite a ways off; according to Statista, in the span of only three years, e-commerce sales went from almost $300 billion (2014) to $452 billion (2017). With numbers like this, just imagine what the future will hold.2 

Warehouses are popping up in urban centers like New York City, Boston, Los Angeles, and many others, so that companies can give their customers the products they need, when they need it. Keep up with demand, and look into getting on this wave!