Rocking the Retail World: E‑Commerce and the Challenges of Warehouse Staffing

The rise of e-commerce has rocked the retail world. Shoppers can now order necessary items with unprecedented convenience. From the ease and comfort of their living room couch, consumers can order and checkout in minutes without ever having to step foot outside; without having to drive across town; without having to wander through aisles trying to find where the items are stocked, and without standing in long checkout lines. Shipping online is frequently free (given purchase over a minimal limit), and will arrive at the door within days, if not hours. Amazon Prime Now delivers within a one to two-hour time-frame to major metropolitan areas, fulfilling the at-the-moment consumer demand that has become part and parcel of 21^st century life. Staples, Home Depot, Best Buy, QVC, Nordstorm and Overstock.com all feature in the Top 25 E-commerce Retail List with innumerable medium and small operators rapidly expanding their ecommerce presence.[1]

The astronomical growth of e-commerce, however, has a profound effect not only on the ease of the consumer’s shopping experience, but also on the industrial infrastructure and employees that support it.

The Infrastructure Effect

The growing demand of e-commerce shoppers coincides with the increasing decline of large-scale shopping centers and megamalls. Suburban malls are frantically trying to keep the doors open with high-scale dining options and a range of entertainment offerings. The dozens of department store chains that have historically served as the retail anchors for large malls, such as Macy’s, Kohl’s, and Sear’s, have recently announced dozens of store closings.[2]

Empty malls are being razed to accommodate apartments and office buildings, and massive warehouses, distribution, and fulfillment centers are being built in industrial zones adjacent to railroad rails and freeways. The rapid growth in fulfillment centers is fueled by the rise of retailers seeking to establish an omnichannel presence, and the significant increase in the number of consumers who preferentially shop online. E-commerce enjoys a retail annual growth rate of 8-12%, with brick-and-mortar retail growth lagging consistently behind at 2.8%.[3] BI Intelligence predicts the online retail growth of $247 billion over the next three and a half years.[4] Just as these warehouses and fulfillment centers represent the new age of retail e-commerce, companies are similarly finding an increasingly urgent need for an entirely new kind of worker.

The repercussions are being felt from the consumer to the contingent workforce, from companies establishing an online presence to high schools preparing students for the next generation of employment opportunities. In response to a growing
demand for warehouse workers, high schools in California and Florida have created vocational training programs where students enter ‘mock warehouse’ facilities in order to learn how to operate forklifts through virtual reality and work alongside robots.[5]

The Staffing Effect

This growing network of e-commerce sites, fulfillment centers, and delivery services function together to seamlessly coordinate the online shopping experience from initial order to eventual home delivery. This infrastructure network, particular to the growth of e-commerce, requires an influx of warehouse staff to box the orders and maintain the facilities, and a robust transportation system to support rapid delivery mandates. As the unemployment rate drops, online retailers frequently have a difficult time finding a sufficient number of warehouse workers. It is not uncommon for major retailers to scramble to find warehouse workers in advance of the holiday rush, particularly when competing within a sharing economy when millennials generally prefer to work on their own terms. Online employers have already had to sweeten the deal with pay
increases, mobile health clinics and on-site child care.[6] As e-commerce continues to drive retail growth, the need for a reliable pool of light industrial workers to move and pack goods, as well as expanded transportation staff to deliver them, will become the critical bottleneck for expanding retailers.