E-commerce has undergone big changes in recent years, and with the effects of COVID-19 still being felt, some of those changes are accelerating or taking on new forms completely.
By Larson Design Group
It’s no secret that e-commerce has experienced enormous popularity and accessibility in the last decade. Behind the scenes of that great, nebulous concept of “online shopping,” however, massive shifts in how all those products get to consumers have been ongoing – and with the effects of the COVID-19 pandemic still being felt, some of those changes are accelerating or taking on a new form completely.
Founded in 1986, Larson Design Group is a 100 percent employee-owned national architecture, engineering, and consulting firm with 15 offices in seven states. LDG’s years of experience in every facet of multi-disciplined retail engineering services as well as the light industrial, warehouse, and distribution center fields uniquely positions the firm to deliver innovative, efficient solutions to its clients.
For a closer look at some of the changes we’re all experiencing and how LDG is meeting the challenges they present, Rob Gehr, LDG’s vice president of retail design and buildings; Dan Manns, LDG’s director of building engineering; and Alex Ramon, LDG’s director of retail design, and office leader for LDG’s Phoenix office sat down for a discussion on retail and e-commerce.
A conversation with LDG about e-commerce.
LDG: How has the landscape of this industry changed, especially with the recent effects of the COVID-19 pandemic?
Rob: In general, a lot of commerce has moved online in recent years, which isn’t really news to anyone – we can shop on our phones or tablets now for almost anything. To attract and retain customers, however, companies are trying to master the aspect of offering fast or one-day shipping, and that’s where the infrastructure has to continue to grow in order to meet the demand. The companies that have been able to master that have seen enormous success in the marketplace.
Of course, we all saw online commerce really explode during the pandemic, but not just for consumer goods – people who had never had a need to get groceries or prescriptions delivered were suddenly looking for those options. Those companies or chains that could afford to do it had to convert very quickly some of their square footage to fulfill online orders. That specific aspect is something we’ve been seeing in retail for a few years but was really accelerated by the pandemic: footprints of stores getting smaller and companies converting existing space into these mini distribution centers. I think it’s something that will stick around in the long-term because it enables the company to offer the convenience of picking up or shopping in-store.
Dan: I think we saw the industry jump five years in 18 months due to demand from the pandemic and we saw a lot of companies push into the e-commerce space. It affected brick-and-mortar stores to a large extent, but I will say it’s not the end of them completely. There’s still a need and a desire for things like restaurants, for example, and consumers need a place to pick up purchases, and sometimes there’s still no substitute for trying on jeans or a pair of shoes before you buy them. But going forward, the footprints and layouts of those physical locations might look and function differently than before.
LDG: What are some of LDG’s areas of focus as it relates to these changes?
Dan: It’s mostly what consumers don’t see – all the moving parts of warehousing and distribution that make it possible for a purchase to make it to you in a day or two. Those delivery times keep getting shorter as more and more companies want to be the “fastest” option, and it’s putting a lot of pressure on the companies that provide those warehouse and delivery services. That’s where the AEC industry factors in: We look at the physical infrastructure, the buildings that those companies are working out of, and figure out how to make them more efficient and better accommodate the increasing demand.
For example, let’s say that a shipping company now has more packages that need to go out same-day or next-day – square footage for that area of the facility must be taken away from areas that fulfill longer shipping times. Loading and unloading areas will need to be larger and longer. There will be more employees in that section. How can that be done in a way that most efficiently utilizes the existing facility? What needs to be changed, installed, or removed? How can the company make sure it’s safe for the employees? It’s everything about the building itself, down to things like HVAC considerations – there might be a need for different A/C systems for facilities in hot and dry locations, like the southwest, to cool these newer, larger areas.
Alex: Dan mentioned shoes, which brings up an interesting phenomenon in the e-commerce world. When ordering online, the customer does not have the ability to try on shoes or clothes for size. So, what a lot of consumers do is order the item in the size and color they think they need, plus they order the same item in one size below and one size above, in the hopes that one of those three will fit. With free return shipping, there is no cost to the consumer. Imagine what this does to the seller when it is not uncommon for two-thirds of their orders to be returned. The reverse logistics is incredible. Materials must be received, repackaged properly, restocked, and put back into active inventory in the system. It’s a lot of handling and effort, requiring personnel, equipment, and space. When it affects their space, that’s an opportunity for LDG.
Dan: On another note, all these changes to e-commerce also tie into the alternative fuels services that LDG provides. A lot of companies are looking at significant increases in vehicle wear-and-tear and especially fuel consumption, and are interested in converting their fleets to options like compressed natural gas. We have extensive experience not only in building new compressed natural gas fueling facilities – including the largest such facility in the country – but also converting existing ones, which is an attractive option for these companies.
LDG: How does this help us or set us apart as an architecture & engineering firm?
Rob: LDG has a lot of clients that we’ve been working with for a long time – in some cases 25 years – so in addition to what’s happening with the retail industry overall, we have ground-floor knowledge of any specific changes they’re facing. We’re working with them from the beginning to the end of their supply chain. It gives us a unique understanding of the evolution of the industry as well as the client, and we can keep up with the changes that are being thrown at us. Also being involved in that “last-mile” distribution aspect, as Dan mentioned, is a unique advantage for us – working with some of the largest shipping and delivery companies in the country has really enhanced that understanding. These are all benefits of being a one-stop shop AEC firm: We can cover all aspects of what seem like daunting challenges to an industry.