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Boom in E-Commerce Creating Workforce Opportunities

The COVID-19 pandemic has accelerated the rise in e-commerce and created opportunities for fulfillment jobs, along with a need for increased automation and training.

Q4 2020
The right combination of people and technology is critical to meet consumer demands, as pictured here at an XPO warehouse.
Image courtesy of XPO Logistics, Inc.
The right combination of people and technology is critical to meet consumer demands, as pictured here at an XPO warehouse. Image courtesy of XPO Logistics, Inc.
To say that COVID-19 has altered our world is an understatement. Among the pandemic’s many adverse effects is the impact on brick-and-mortar retailers. UBS analysts projected that 100,000 retail locations could close by 2025 if Americans continue the online shopping craze perpetuated by COVID-19.

The pandemic is just the latest blow to a trend in brick-and-mortar downturn. Previous years have seen record closures due, in part, to online retail giants dominating retail.

Meanwhile, steady (and rising) unemployment numbers have left many out of work. But there is an expected bright spot in the culmination of these two problems: The rise of e-commerce could fuel a massive need for fulfillment center workers.

E-Commerce Fulfillment Jobs Represent a Major Opportunity
With the ongoing shift from brick-and-mortar to online shopping, workers displaced by traditional retail or other affected industries may be able to transition their skills to e-commerce fulfillment centers. This realm will see continued job growth for the foreseeable future, and while many common skills can easily transfer to fulfillment center positions, the working conditions might be even more favorable than in other industries.

As compared to traditional warehouse jobs, e-commerce fulfillment centers feature an upgraded, often air-conditioned and updated work environment. Additionally, the job functions of packing and preparing SKUs can be less labor-intensive than most traditional blue-collar jobs — and, in many cases, offer better wages.

But What About Automation Taking Jobs?
It’s true; automation will continue to increase, especially as human capital continues to become more costly. We’ve known for years now that automation is a game-changer for fulfillment, but the significant capital investment required has remained a barrier to entry for smaller retailers. Many have opted to wait for the technology to mature and become more affordable. However, after COVID-19 spurring e-commerce consumer demand to unforeseen heights, many companies are more willing to invest in automation to keep up. And retailers who don’t embrace automation will experience a serious loss of market share.

Jobs managing or working alongside automated systems require more advanced skillsets. That said, automation begets job opportunities. Some jobs managing or working alongside automated systems require more advanced skillsets, but there is a wide range of new opportunities with this technology. It’s been estimated that automation will create more than 130 million new jobs across industries, and upskilled and reskilled workers will have a leg up.

In fact, in some areas, community colleges actually offer direct certifications to a specific company’s fulfillment and distribution centers. For example, Mid-America Industrial Park outside of Tulsa, Oklahoma, has a university campus and technology training center within the park. Tenants of the park can send employees to the training center to help develop work skills and improve retention.

Interestingly, this type of educational program does more than improve the job outlook for an area’s eligible workers — it also entices organizations to build in certain areas. Fulfillment center location, as it turns out, is increasingly more important to attracting labor.

On the Horizon: Development in Smaller Regions
Traditionally, the opportunities for e-commerce blue-collar labor pointed to large metro markets. While this may have been true in e-commerce’s infancy, we’re seeing a trend of greater development in small and mid-sized markets.

There are a few reasons: First of all, retailers are answering the competitive nature of finding warehouse workers. In larger markets, there’s strong competition for labor — wages are going up and proximity to home is a huge factor for many workers. In some regions, a fulfillment center’s location on a tollway is enough to deter someone from applying there.

Major retailers and e-tailers want a presence in smaller markets simply to satisfy the huge demand for fast shipping. To illustrate, for a major market like Chicago, the same warehouses built in two similar cities could have dramatically different success attracting labor based on the need for employees to take a toll road during their commute. This is why hyper-accurate labor analysis — with real-time data — is a top consideration for warehouse placement.

As an example, JLL utilizes many different sources of data to analyze real-time job postings and their details. This includes the number of days the job has been posted, the wages for each position at the zip code, or drive-time level throughout the United States. With this type of powerful insight, developers, investors, and tenants can understand the demand for skilled labor, get valuable intel on regional wages, and create competitive job postings.

The second reason that major retailers and e-tailers want a presence in smaller markets is simply to satisfy the huge demand for fast shipping. Major retailers are now investing in smaller “hub” locations in markets like Indianapolis, Baton Rouge, and Raleigh as a means of accessing the “last mile” of distribution.

Will Your Company Cash in on the Renewed E-Commerce Boom?
It’s clear that this challenging moment in our history is reshaping many industries. If you’re hoping to mobilize your warehouse to take advantage of e-commerce opportunity, these are the things you should keep in mind:
  • Consider targeting the many workers displaced by traditional retail or other affected industries, whose skills can likely transition to e-commerce fulfillment centers.
  • There’s never been a better time to invest in automation, and market players who don’t embrace this shift will feel the negative effects.
  • Companies that invest in upskilling and reskilling workers through internal training and/or community partnerships will continue to have an advantage in attracting labor.
  • “Last-mile” development outside of major markets will continue to thrive, and the location of these facilities will determine who can compete for labor.

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