According to the Fall 2013 “Big Box Velocity Index” from Jones Lang LaSalle, even though just 5.5% of current retail sales are online, fully 12% of the U.S. requirements for warehouse space are eCommerce related.  The reason?  eCommerce fulfillment is increasingly moving to a one-day and same-day delivery model.  So companies, like Amazon, have to increase the number of distribution centers to get physically closer customers. 

The chart below shows the growth from 2011 to 2012 in both store sales and eCommerce sales for 4 major retailers.  It’s pretty clear where the growth is coming from.

So, if companies are investing millions of dollars to build out their eCommerce fulfillment infrastructure, are the dollar returns from online sales today sufficient to recoup this investment?  Well, not necessarily. 

Current online sales are growing, but still small compared to store sales.  Companies are banking on the continued growth in online sales and are investing in infrastructure now to achieve market share gains in the future as commerce moves from the store to the desktop. 

Instead of the traditional distribution model of pallets in and pallets/cases out with batch processing, eCommerce fulfillment involves processing a large number of very small orders in real time.  This requires different software, a different warehouse design and hardware and, without automation, significantly more labor.  To address the intense labor requirements of a pick and pack warehouse environment, some etailers have invested heavily in warehouse automation.  Check out iHerb’s automated warehouse in Kentucky.

But this type of automation and investment doesn’t make sense for most small and mid-sized customers, many of whom rely on companies like Weber Logistics for multi-channel fulfillment.  Watch our eCommerce fulfillment video to see how Weber works with companies to efficiently manage B2B and B2C fulfillment from a single West Coast distribution center.  This kind of help from knowledgeable fulfillment companies helps manufacturers and growing retailers access eCommerce expertise and avoid huge capital investments, while still meeting all fulfillment requirements of online buyers.