pexels-photo-230544Napoleon once described Britain as a ‘nation of online shoppers’, or he might have done had he lived a couple of centuries later.

But it’s true. Nobody loves to click and collect quite like the British. We’re ahead of the US, Germany and France in share of online retail trade and, despite the looming Brexit, online sales are set to rise to £63bn ($74bn), according to one recent forecast.

The main reason for this is geography. You could fit four Great Britains into Texas, even if we all wore stetsons, yet it’s teeming with folk. There are 65 million of us. Set up a distribution centre (think of Amazon in Peterborough, or is that Peterborough in the Amazon warehouse?) in the Midlands and Rob’s your dad’s brother.

We’re also constantly glued to smartphones (nooooo!), which is becoming the way to buy. According to IMRG, the online-retailers’ association, sales through smartphones rose by 90% from January to September. Black Friday is expected to send online orders galactic.

What all this means is that retail companies have had to become logistics companies. Parcel management is the name of the game. In fact, the Royal Mail’s existence has been saved by this new landscape of parcels. IMRG reckons that British retailers will send out 1.2bn packages this year – two years ago, it was just 920 million.

The other result of all this frenzied clicking has been the emergence of warehouses. Our green and pleasant land has become a green and pleasant land peppered with grey warehouses. They cover 40 million square metres of the country.

But the e-tailing market is getting more aggressive. Take Morrisons – it announced this week that Amazon would start delivering orders from its supermarkets to the London area within one hour. Amping up delivery in this way has meant more warehouse space on the edge of big cities.

Then there’s Graze, the online snack business, making up two million punnets of raisins, almonds, cranberries and brownies every week in a west London unit. The business has to employ about 30 people just to track customers online, predict demand and ship the punnets efficiently.

These warehouses have mushroomed despite the government wanting to build houses instead. Warehouse rents are also rising dramatically, so margins have been squeezed. The solution is to build mixed developments of houses, industrial units and warehouses.

Those margins are being battered further by online returns. In general, around 6% of items are returned, but it’s up to 40% for clothing. More costs. And returns are now a booming logistics business all by themselves. Add in supermarket deliveries and roads are now more clogged than the portaloos at Glastonbury.

Despite all this, nobody clicks with Internet shopping quite like the Brits.

But maybe we all shop at home because we can’t get onto the roads for all the parcel trucks? Just a thought.

 

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Author Chris Painter

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