Opportunities in e-commerce

It’s old news that the growth of e-commerce provides opportunities for industrial real estate developers. But an article in nreionline.com claims that of the $500 billion in online US sales last year, $75 to $150 billion worth of merchandise was returned. These are US figures, but they show returns for online sales to be two to three times more frequent  than returns for in-store sales.

Returned merchandise creates a whole series of downside issues. But there is an upside for industrial real estate developers and investors. Because processing returns is messier and less efficient than processing outgoing orders, “reverse logistics” requires about 15 to 20 percent more space than outbound supply. So just as we are seeing a growth in the demand for logistics space, so we are likely to see an increase in demand for space for “reverse logistics” ,i.e. returns.