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Bricks and clicks: the e-commerce revolution has only just begun



In the coming years, says CBRE, e-commerce will continue to drastically change not just how goods arrive at our doorsteps, but what an actual ‘store’ really is. The physical size, shape and location of buildings that supply the entire retail ecosystem will shift, and artificial intelligence will be a touchpoint at nearly every step of the journey. The e-commerce revolution has only just begun.

It’s been 15 years since Amazon unveiled Prime, a first-of-its kind subscription service that originally offered free, two-day delivery. Today, 101 million people are Amazon Prime members, according to recent research, which means nearly a third of all American households now have access to a staggering 10 million products with what is now a one-day delivery model. And that’s just from one online retailer—the world has been blanketed by ultra-fast delivery of goods (some within mere hours) from a handful of other giants such as Walmart, Alibaba, JD.com, Rakuten and others.

This titanic shift in the way we get our goods has transformed our expectations as consumers. On-demand shopping with the click of the ‘purchase’ button, and the speed at which products arrive at our doorstep, are now the norm. This is perhaps the first point of no return for the e-commerce revolution, and it’s just the starting line. Traditional bricks and-mortar retail is healthier than most think: E-commerce currently only accounts for a little more than 14% of all retail sales in the U.S., according to Euromonitor International. But that ratio is set to change quickly.

Almost half of sales
CBRE predicts that by 2030, the top ten global e-commerce markets combined will account for 43% of total retail sales. In order to make the transition into this changing landscape, the real estate advisor goes on to say, retailers will have to rethink their go-to-market strategies, including their real estate needs. This paradigm shift unrolling over the next 10 years will alter the retail model for how goods are sold, shipped and returned. Not only that, it will modernise the bricks-and-mortar retail experience in general. As Generation Z – true digital natives who will account for 31% of the global workforce by 2030 – enter their prime spending years, expect this shift to accelerate. Massive investment will be needed to improve infrastructure and solve the hurdles, especially the cost, of the last mile of rapid, low-cost delivery.

Predictive warehousing
By 2030, predictive ordering based on consumer behaviour will help move inventory to the places that need goods before they’re even ordered. But predictive ordering isn’t just about anticipating grocery deliveries.
The next step will be about AI-built models of customers in certain areas based on their ordering history, brand preferences and other purchasing tendencies to direct inventory where it most likely will be ordered. Those products will then be sent closer to groups of customers who fit that AI-constructed profile, where they will sit for a time in a nearby fulfilment facility before being sent to customers who indeed order those products. This brings down the cost of offering same-day delivery and serves as a lower-risk gamble to accelerate the supply chain in a very tech-driven strategic way.

source : CBRE report ‘Global Outlook 2030’
Tim Harrup
09-04-2020


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