As e-commerce grows and evolves, e-fufilment becomes essential to meeting consumer expectations, whilst companies that sell goods online must employ more capex into their supply chains, managing to stay nimble and keep low costs at the same time . According to Prologis Research these trends have a positive impact on the European economy and job creation as well as on specific sectors such as the logistics real estate that supports the e-commerce logistics.
Prologis conducted an analysis of e-fulfilment leasing based on industry and proprietary data. The basic conclusion is that growth in e-fulfilment over the last three years translated into five million square me"ters of new leases during that time
This growth had been quantified through a detailed lease-by-lease review. All new leases across 10 European countries over the last three years were analyzed in order to relate e-commerce and new leasing. The leases were divided into three categories:
1.Direct Lease: requirements for dedicated e-fulfilment facilities with retailers who are either online-only or who have dedicated facilities. The category is straight-forward to track.
2.3PL Lease: fulfilment facilities that are performed by third-partly logistics providers (3PLs). The nature of this use, whether for store distribution or e-fulfilment, is not always transparent.
3.Omnichannel Lease: demand that surfaces as part of joint store distribution and e-commerce fulfilment. This can be difficult to identify compared with store distribution alone.
Changing shopping habits drive demand for logistics real estate. Specifically,each €1 billion of incremental online sales generates approximately 77,000 square meters of new logistics demand. The prediction is that e-commerce growth should require 15 million square meters of logistics space in the next 5 years.
Furthermore, e-fulfilment is a strong job creator across Europe.Finding qualified employees is and will remain one of the key location criteria for online retailers. Being located close to metropolitan areas offers the best opportunities for finding new employees with a range of qualifications and affiliated services.
E-fulfilment leasing has been focused on the largest economies along with cost-efficient locations too: Germany, UK and France.
Several factors influence the location strategies within markets such as proximity to customers, availability of labor, proximity to the distribution networks of parcel and express carriers. Locations close to urban areas are well-positioned for the e-commerce sector.In practice there are two types of requirements which include infill facilities for last-mile delivery and larger requirements serving regional e-fulfilment. The first one tend to be smaller (< 10,000m²) and can be met with existing facilities. For regional e-fulfilment requirements, traditional locations for modern logistics facilities attract the most demand.
Concluding, e-commerce retailers and distributions have begun to invest in the e-fulfilment. As a result, it has become a considerable force of the European Economy because of the job creation, the growth of leasing and the expansion in Europe’s logistics real estate markets.
Source: Prologis. See the full research paper here