Warehousing and logistics get benefits from the growth of e-commerce

According to JLL, high demand and continued growth from e-commerce users have put great pressure on the existing supply chains, facilities and inventory. It is forecasted that the growth of online retail channel will contribute to promote logistics investment activities.

Nowadays, retailers need a multichannel strategy - including online sales and store one - to take full advantage of the e-commerce explosion. For example, many retailers around the world are now using consumption power in Single's Day to launch special offers and promotions.

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JLL experts predict the growth of online retail channel will contribute to promote investment activities in logistics real estate services..

In the field of real estate, warehousing is the segment that will get the most benefit from the growth of e-commerce. Online retailers like Alibaba require a huge and optimal logistics space just to handle goods on Single's Day. In the first 9 months of this year, online sales in China increased by 16.8% over the same period in 2018.

JLL said that China has the largest e-commerce market in the world, and online retails is also witnessing a incredible growth worldwide. This growth will strengthen the demand for logistics real estate in the future. Many markets in the region will lack of large-scale modern warehouses that can meet the needs of online retailers.

Meanwhile, consumers also constantly have requirements for transactions, such as delivery time on the next day and even within 24 hours is a competitive advantage. This means they will need more the final warehouses in the city to easily reach consumers. JLL representative said, the great demand for final warehouses will continue to change and affect the optimal design of city planning.

For example, Alibaba receives one billion orders weekly, but on a Single's Day they have to handle the same amount of goods. To maintain delivery efficiency, Alibaba operates its own logistics operation through Cainiao Network. The group has also invested in a courier company called ZTO Express. This supply chain integration will become more popular with major retailers.

According to JLL, space needs of retailers such as Alibaba and shipping companies will create opportunities for logistics real estate companies. This unit expects to have many M&A deals in the field of logistics real estate.

“Although the investment performance is not really significant, logistics real estate still brings a positive profit compared to other real estate fields in many markets in the region. And the ongoing structural changes in this area will support future capital flows, ”the JLL representative emphasized..