From Our CEO
E-Commerce Holiday Delivery Speeds Soar
By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE
With December 25th just a few days away, there’s no doubt that the elves are putting in some overtime at Santa’s workshop. According to tradition here in America, enough toys for all the children in the world are currently being manufactured on a sprawling campus way up in the North Pole. It’s a family business, with the complex also housing Santa, Mrs. Claus and at least eight reindeer.
However, as people from England or Finland will tell you, the real Father Christmas actually resides in Lapland. Part of the arctic circle, Lapland has more reindeer than people, which is great news for anyone concerned about the driver shortage.
Japanese kids are being extra good right now in anticipation of a visit from Hoteiosho — a god with eyes in the back of his head. As with most Buddhist gods, he lives on top of Mount Fuji, but treks down each year with a sack of toys for children — at least those he doesn’t spy misbehaving.
In Iceland, the 13 Yule Lads are descending from their mountain home, each one placing a gift in children’s shoes at night. However, the small tokens may not be worth the mischief these guys cause. With names including Spoon Licker, Door Slammer and Sausage Swiper, these pranksters are clearly up to no good.
Interestingly, these customs all have something in common: Holiday inventories are traditionally stored in the middle of nowhere, miles and miles from the end customer. Of course, the current e-commerce boom is changing everything.
“Before the days of online shopping, supply chains consisted mostly of warehouses and distribution centers far away from cities for manufactured goods awaiting transportation to malls and other brick-and-mortar retail locations,” writes Peter Grant for The Wall Street Journal.
Now, as retail success is increasingly tied to delivery speed, Grant says the “battle of landlords” is creeping ever closer to city centers. The world’s biggest real estate owners are racing to buy up more urban land, establish well-placed warehouses and dominate the business of lightning-fast e-commerce.
This trend also has the potential to enhance reverse-logistics efficiency. In fact, e-commerce returns constitute 700-million-square-feet of warehouse space in the United States alone, making reverse logistics facilities the number-one new type of warehouse. This isn’t surprising, when you consider that we will return about $100 billion worth of gifts over the next few weeks, and it all has to go somewhere.
Until retailers figure out how to guarantee that consumers hold on to their purchases — and Santa and his cohorts perfect their gift lists — the warehouse wars will escalate. But we can all help alleviate some of the tension by remembering that it’s not about what’s under the tree (or in the shoe) that counts. With that in mind, all of us at ASCM wish you a wonderful holiday season. Hopefully, you are enjoying some well-deserved time away from the workshop.