The Logistics of Disruption: How our Physical World is Being Re-mapped by E-commerce
by Derrick Choi and Eric Williams
With online sales growing more than 20 percent each year, millions of clicks are rippling across the economy and leading to a wave of change.
That’s because all those digital purchases profoundly impact the physical infrastructure supporting them. Complex systems of warehouses, fulfillment centers and more help meet consumers’ sky-high expectations of an effortless and speedy online shopping experience.
When we talk about projectMOVE, our research deep dive into what’s next in the world of transportation, it boils down to how we move people and products intelligently through design. What you’ll quickly find in the third and final research module previewed below is they often rely on the same transportation networks. Infrastructure is blind.
E-commerce giants, Amazon chief among them, are taking advantage of those networks and unleashing potent new strategies for selling and storing purchases while in transit. Much of this activity has already started to affect our clients. You might say the future of logistics has arrived slightly ahead of schedule.
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‘Bricks and clicks’ can co-exist
Before you sell off all your retail stock, keep in mind e-commerce doesn’t exist in a vacuum. Traditional retailers are re-calibrating their businesses instead of abandoning the concept of physical stores altogether. Wal-Mart is even turning its physical stores into a vital cog of its online business.
Vice versa, online natives like Amazon have adopted the same philosophy and are opening real-world locations to complement their online presence. It’s all part of an omni-channel strategy to create a healthy mix of touchpoints and reach consumers at the right time and right place. In this business model, a company’s operations – from R&D to customer support – revolve around consumer dynamics instead relying on a more conventional and linear supply and distribution chain.
The era of the mega-region is here to stay
Mega-regions are vast networks of metro areas that share ecosystems, economies and heritage. According to the Regional Plan Association, most U.S. population and economic growth will occur in its 11 mega-regions illustrated above.
As we analyze the distribution systems of leading e-commerce players, with Amazon again leading the charge, we see striking alignment with these clusters of cities. The e-commerce giant may eventually tap them for ‘anticipatory shipping,’ a patented algorithm that predicts your purchases and has them ready nearby for when you do pull the trigger.
Existing infrastructure still feels the love
Despite all the futuristic distribution ideas floating around – flying zeppelin warehouses, anyone? – retailers aren’t rejecting pre-existing infrastructure. In many cases, the opportunistic ones are embracing underused resources. Pennsylvania’s Lehigh Valley International Airport, for example, had been struggling to increase its passenger service for years before making a deal with Amazon to serve as one of five key airports in the e-retailer’s air cargo distribution network.
While players like Amazon have entered the cargo business in a big way, they’re actually working alongside existing third-party services, including the United States Postal Service, to complete the so-called “last mile” of their deliveries. Planes, trains, boats and autos will continue playing key roles in the movement of goods for the foreseeable future. It’s time we contemplate how they can adapt to the evolving needs of 21st-century commerce.
Some of our clients have asked how their airports can take part in the e-commerce revolution. While the answers are never simple, criteria do exist. How much space is available for operating and processing cargo? In what sort of shape is the surrounding roadway infrastructure? How close is their airport to high-demand mega-regions? These are only a few of the questions we help identify and address. The e-commerce airport of the future – as well as the retrofits of today – will cater to the entire e-commerce ecosystem.
Derrick Choi leads Populous Americas’ aviation efforts with 15 years of experience in complex public infrastructure and transport planning.
Eric Williams collaborates on research and design issues pertaining to the civic realm.