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Industrial real estate can remain competitive in the era of e-commerce

Industrial real estate in South Africa must adapt to the growth of e-commerce by providing flexible warehousing solutions, partnering with logistics companies, and investing in technology.

Jodi Sher
Jodi Sher
March 27, 2023
Island Works serviced logistics park
Island Works serviced logistics park

The rise of e-commerce in South Africa has significantly impacted the logistics and warehousing industry. With the growth of online retail, small and medium-sized enterprises (SMEs) face distinct challenges and thereby have distinct needs. The industrial real estate sector must adapt to meet these needs to remain competitive. In this article, we will explore the impact of e-commerce on logistics and warehousing. We go on to suggest strategies that industrial real estate companies can adopt to remain competitive in the era of e-commerce.

Understand the e-commerce climate

According to recent statistics, e-commerce sales in South Africa are expected to reach R225.4 billion by 2025. The growth of e-commerce has created unique opportunities for SMEs to enter the online retail space. However, this growth puts pressure on the industrial real estate industry to provide flexible and adaptable warehousing solutions to accommodate the specific needs of SMEs.

This requires investment in technology and infrastructure that support the efficient movement of goods. High-speed internet, reliable transportation networks, and streamlined warehousing and logistics operations are all factors that need to be considered.

Embrace flexible leasing & adaptive spaces

One of the critical challenges facing SMEs is the need for an ‘elastic’ warehousing space that can expand and contract as needed. This is particularly important for businesses that experience seasonal fluctuations in demand, or businesses that need to scale their operations quickly.

To meet this need, industrial real estate companies must provide flexible warehousing solutions geared toward the unique needs of e-commerce businesses. This requires a shift away from traditional leasing models towards newer flexible leasing models. Flexible leasing models allow tenants to adjust their space requirements as their business grows or contracts. By offering flexible and customizable leasing options, landlords can attract and retain SMEs in a highly competitive market.

Partner with logistics companies

A vital consideration for SMEs in e-commerce is last-mile delivery; the final stage of the delivery process from the warehouse to the end customer. This can be a significant challenge for SMEs, as they often lack the resources to establish and maintain their own delivery networks. By partnering with logistics companies or offering value-added services such as shared delivery networks, the industrial real estate sector can assist SMEs to overcome this challenge and expand their customer reach.

Invest in technology & infrastructure

To remain competitive in the era of e-commerce, the industrial real estate sector must invest in technology and infrastructure that supports the efficient and cost-effective movement of goods. This includes the use of advanced warehouse management systems that automate inventory management, order fulfilment, and other logistics operations. With the use of these systems, the industry can reduce costs and improve operational efficiency, ultimately benefiting both tenants and landlords.

In conclusion, the growth of e-commerce in South Africa creates significant opportunities for SMEs to compete in the online retail space. Industrial real estate must continue to adapt in order to meet the changing needs of SMEs and remain competitive in the rapidly evolving e-commerce industry. SMEs engaged in e-commerce require flexible and customizable warehousing solutions tailored to meet their specific needs. And last-mile delivery is a cornerstone of effective e-commerce. For the benefit of both SMEs and landlords, industrial real estate companies should offer ‘elastic’ warehousing space and flexible short-term storage solutions.