E-commerce spike leads to major investment in warehouse space

A massive spike in online sales during the Covid-19 crisis is expected to fuel unparalleled growth in e-commerce operations in South Africa. The general rule of thumb is that e-commerce requires three times the logistics space of traditional storefronts. “Therefore it is reasonable to assume that we will see a much greater investment in warehouse space to support local e-commerce. In addition to this, warehousing demand might be accelerated by the growth of e-commerce in the rest of Africa,” comments Paragon Group Director Estelle Meiring.

Improvements in racking, logistics and building technology have seen an increase in warehouse clear eave heights, often as high as 15 m, as well as an increase in yard depths, sometimes in excess of 45 m. “We have also noticed more requests for cross-docking and an increase in the number of warehouse doors required, as inputs and outputs are maximised,” reveals Meiring. There is a strong move towards sustainability, specifically the installation of photovoltaic panels to reduce reliance on external power supply and cut costs over time. Other key sustainability features include natural light, better building insulation and water conservation. Security remains a major concern.

Another emerging trend is on-demand warehousing, dubbed the ‘Uberisation’ or ‘WeWork’ of warehousing, which sees services and space acquired on a ‘pay-per-use’ basis. This method of warehousing gives customers more choice and flexibility over location, cost and supplier, either as a complete substitute to owning warehouses, or as a partial replacement when a new warehousing location becomes necessary.

“The emergence of on-demand warehousing serves as a response to the increasing number of supply chain challenges that businesses are up against,” points out Meiring. Many users of warehouse space do not want long-term leases in a period of inventory fluctuation and uncertainty. Predictions are that even South Africa’s larger retailers will need immediate space for both slow and fast-moving goods while they assess their long-term distribution plans.

The Cape Town market remains unique in that it still has prime vacant land for the development of large distribution warehouses in close proximity to Cape Town International Airport. These sites are centrally situated to consumers, and are an ideal location for online sales related warehousing, distribution and fulfilment. Additional Western Cape areas that show a lot of promise are the Belville South and Brackenfell and Western Coast nodes. Other parts of the country expecting a major uptake in recently developed industrial areas are Midrand and Pomona in Gauteng and Riverhorse Valley in KwaZulu-Natal.

An interesting trend in the US is that e-commerce and omni-channel retailers are expanding their distribution networks, working from multiple, smaller distribution warehouses closer to customers, rather than from a centralised distribution centre, due to changing demand. Where five-day delivery times were once considered standard, consumers now routinely expect next-day or even same-day delivery. In line with this, Amazon has now started acquiring some failed malls, using the land to develop online fulfilment centres.

“This makes a lot of sense, as these malls are perfectly located close to consumers and major transport routes,” argues Meiring. “Although our e-commerce industry is a lot less mature than that of the United States, it would be interesting to see if we will follow the same trend in years to come, which might change the way we see distribution centre nodes in future,” concludes Meiring.



Latest


25 Sep 2020
6 Reasons to choose AXOR

Over the last 25 years, AXOR has carved out a space in the design history books as a brand that creates new…

6 Reasons to choose AXOR

Over the last 25 years, AXOR has carved out a space in the design history books as a brand that creates new benchmarks in form and function. Their range of around 2,000 products are each finely crafted, with no detail left untouched. And over time, AXOR has come to embody the creative…

23 Sep 2020
SABIS School Runda achieves Green Star Africa-Kenya PEB rating

The new SABIS® International School – Runda in Nairobi achieved a 4-Star Green Star Africa-Kenya PEB v1 Design Rating in…

SABIS School Runda achieves Green Star Africa-Kenya PEB rating

The new SABIS® International School – Runda in Nairobi achieved a 4-Star Green Star Africa-Kenya PEB v1 Design Rating in April 2020. The school is being presented as a case study at the World Green Building Week (21-25 September), and a tree-planting ceremony is being planned as part of the…

23 Sep 2020
Radisson Red is the new Green

No. 6 Silo building receives star environmental rating from the Green Buildings Council of SA The V&A Waterfront today achieved another sustainability…

Radisson Red is the new Green

No. 6 Silo building receives star environmental rating from the Green Buildings Council of SA The V&A Waterfront today achieved another sustainability accolade when the Green Buildings Council of South Africa (GBCSA) handed over a plaque recognising the sustainable development of the Silo District’s No. 6 Silo building. The building, which now…

23 Sep 2020
V&A Waterfront ‘Theatre to Food Making’ incubator to add a further 4,348m2 to the existing cruise terminal

R63-million investment in partnership with the National Treasury’s Jobs Fund to create major opportunities for food talent within new, 360o farm-to-fork…

V&A Waterfront ‘Theatre to Food Making’ incubator to add a further 4,348m2 to the existing cruise terminal

R63-million investment in partnership with the National Treasury’s Jobs Fund to create major opportunities for food talent within new, 360o farm-to-fork food experience. The V&A Waterfront is pushing ahead with a ground-breaking plan to develop a visionary and local food community incubator starring South African flavours and culture, which will create jobs and…


Top stories


06 Mar 2020
7 Awe-inspiring marble use cases

Marble, an exceptionally versatile material used for centuries to create awe-inspiring art, majestic staircases, classic kitchens and resplendent flooring. With…

7 Awe-inspiring marble use cases

Marble, an exceptionally versatile material used for centuries to create awe-inspiring art, majestic staircases, classic kitchens and resplendent flooring. With today’s contemporary design trends, the wide selection of marble can be used in more ways than ever before.

05 Mar 2020
First Green Key Boutique Hotel in South Africa

21 Nettleton attains their Green Key Award from WESSA, becoming South Africa’s first boutique hotel to achieve this accolade for…

First Green Key Boutique Hotel in South Africa

21 Nettleton attains their Green Key Award from WESSA, becoming South Africa’s first boutique hotel to achieve this accolade for its efforts in sustainability. An exciting partnership between WESSA and 21 Nettleton has resulted in the private boutique hotel in Clifton, Cape Town being awarded the prestigious Green Key award.…

27 Feb 2020
The Nxuba wind farm Renewable Energy

In its ongoing efforts to showcase the potential that renewables can play in boosting the security of energy supplies in…

The Nxuba wind farm Renewable Energy

In its ongoing efforts to showcase the potential that renewables can play in boosting the security of energy supplies in South Africa, Enel Green Power (EGP) highlights its commitment to the country as it nears the completion of its Nxuba wind farm in the Eastern Cape. The company recently started…

23 Jan 2020
Refurbishment at North West University

As the three established divisions of Norcros SA, TAL, Johnson Tiles and Tile Africa recently played important roles in an…

Refurbishment at North West University

As the three established divisions of Norcros SA, TAL, Johnson Tiles and Tile Africa recently played important roles in an extensive tiling project at North-West University’s Potchefstroom campus in North West Province. The project entailed refurbishing the five-block Sports Village, a guest house facility providing accommodation for the public, athletes…


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za