Mobile apps and online purchasing are making it easier than ever to acquire the goods we want and need. However, once we submit our orders, it turns into a waiting game. Retailers are now competing based on delivery time, with many attempting same-day-delivery to create a competitive advantage.
Due to this aggressive “last mile delivery,” real estate decisions have become critical for retailers. How can they get close to their end customers while maintaining a cost-effective supply chain strategy?
In his recent article, “Going the extra mile to win the last mile,” Kris Bjorson, International Director at JLL, examines four distribution real estate models:
1) Traditional Fulfillment and Delivery
This includes parcel carriers, such as UPS and FedEx, where packages are sent from distribution facilities through parcel hubs. This also includes third party logistics companies that handle everything from fulfillment to delivery.
2) Dense, Urban CBD Delivery
This model uses small warehouses in metro areas that operate a large fleet of vehicles for fast delivery (Amazon Prime). Local courier companies and Uber also fall under this category.
3) Ship From Stores / Store Fulfillment
This model makes the most of existing real estate by turning redundant stores into fulfillment centers or using the storage backrooms of existing stores to stock additional product.
4) Aspirational Concepts
An up-and-coming idea is to use drones to make deliveries (think Hunger Games!). While there are many obstacles that would need to be overcome before this strategy could really “take off,” the concept could drastically change the retail supply chain.
Site selection and real estate will continue to be huge factors in determining how retailers can best serve their customers quickly and effectively.