CBRE’s Kurt Strasmann: Solving Reverse Logistics Challenges

By Dennis Kaiser

Online shopping has introduced a new wrinkle into the process that has ramifications across the industrial market. The growing interdependence between e-commerce and today’s retail models, is being keenly watched by the Inland Empire’s logistics sector. Connect Media asked CBRE’s Kurt Strasmann to share insights about retail trends he’s seeing, and how they are playing out in the industrial space in our latest 3 CRE Q&A.

Q: Why are online shoppers more inclined to send back what they bought online?
A: Online shoppers are more inclined to return items because first off, it is it very simple to do so at no cost, and it allows for seamless flexibility regarding your purchase. Also, since you’re not trying on different sizes and styles at the store, many shoppers opt to order a variety of items to increase their chances of getting the right fit at the first go-around. Additionally, if you go to a store and buy something, you typically have to physically go back to return it for a refund. It’s just easier to do out of your home and ship it back. It saves everyone a lot of time and it’s very convenient for the consumer.

Q: How has this trend impacted the industrial landscape in the Inland Empire?
A: Once the return comes back to the warehouse or fulfillment center, it physically takes up space. It has to be off-loaded, stored, sorted and then eventually, it is moved out in various manners. The end result is that more space is needed. This is an added dynamic of the e-commerce phenomenon that results in an increased requirement of warehouse floor space. We don’t see this trend subsiding.

Q: Will that space demand create any challenges ahead, such as supply constraints? How do the needs for reverse logistics differ from outbound e-commerce needs, and can these operations be in shared facilities or independent stand-alone uses?
A: Yes, because we are already at historic lows in vacancy in most larger metropolitan areas and certainly in our area. Development for infill locations such as Southern California remains very challenging in terms of expense, regulation and availability. We anticipate with the added return trend continuing, that it will only exasperate the tight supply constraints within our markets.

Outbound goods are moved straight to the final customer. Reverse logistics are based around the flow of surplus or unwanted materials, goods and equipment back to the firm for reuse, recycling or disposal.

These operations can both, be in shared facilities or independent stand-alone spaces. Typically at this point in time, they are shared. But, moving forward, you most likely will start to see some stand-alone facilities for the larger players to handle returns.

For comments, questions or concerns, please contact Dennis Kaiser