We live in an exciting time of change in the consumer retail market. As technology continues to advance and as consumers get more comfortable with making the majority of their purchases on online, companies are forced to streamline their supply chains in order to compete with the on-demand delivery expectations of consumers.
A recent UBS report shows that e-commerce represents 16 percent of total retail sales (excluding food and gas), up from 8 percent in 2004. It is projected that between 30,000 and 80,000 brick-and-mortar stores will close as e-commerce continues to garner a larger share of retail sales, expected to be up to 25 percent in 2025. With companies like Amazon and Walmart offering free two-day-shipping, customers have become accustomed to finding an item online, clicking “buy” and having the item delivered within 48 hours, or sooner. While most consumers still look for free or low-cost delivery options, they also expect the option of one-day or same-day delivery, and in many cases are willing to pay a premium for that convenience.
Today, this delivery timeline continues to shrink. Customers are now demanding even one- to three-hour shipping. Demand for fast delivery presents a unique problem for e-commerce businesses called the “last mile problem.”
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Steven P. Katkov | Oct 17, 2018
National Real Estate Investor