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Retail War’s Secret Weapon Is Omnichannel Warehousing

Volume 2, Issue 2
January 31, 2014
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The omnichannel logistics models that make a seamless consumer experience possible are now built on a foundation of six new types of facilities, according to a new report by Jones Lang LaSalle.

“The distribution of goods has gone from a bulk process to an individualized delivery model, requiring the reinvention of the supporting real estate that supports moving individual packages where they need to go,” explained Craig Meyer, JLL’s President of Industrial Brokerage.

“We used to talk about pallet to store. Now we talk about dock to doorstep,” he said. “We used to ship one massive delivery of 100 items to one location. Now those same 100 items must go to 100 different destinations—gift-wrapped, overnight, and with a personal note.”

JLL asserted that ecommerce has evolved as a distinct real estate asset class, with six newly-defined primary types of facilities.

They include Mega e-fulfillment centers where merchandise is stocked and picked at item level, andparcel sortation centers (hubs) where parcels are sorted before being forwarded to local parcel delivery centers, according to JLL.

Also, local parcel delivery centers for ‘last mile’ fulfillment, these represent a new type of facility and consumer destination; and local urban logistics depots to ensure rapid order fulfillment particularly to service major cities, these destinations may be integrated or separate from retail store locations.

What JLL calls return processing centers engage in reverse logistics. Many times these are located within mega-fulfillment centers, it noted, but typically are centralized, requiring specialized inventory and materials handling needs. Online food e-fulfillment centers, with refrigeration and cooling, support grocery delivery and similar functions.

Omnichannel strategy will drive a brand new class of distribution real estate, Meyer said. “Customer convenience is driving an evolution in ecommerce logistics – from traditional warehouses to smaller distribution facilities in strategic locations that supports retailers’ omnichannel objectives by prioritizing rapid through-put rather than storage.”

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