As industrial real estate markets tighten globally, e-commerce businesses face mounting pressure to increase storage capacity without expanding their physical footprint. A recent study by Prologis suggests automation may hold the key: retrofitting existing facilities with automated systems could boost supply chain productivity by up to 20%, potentially alleviating demand for additional warehouse space.
The Industrial Real Estate Crunch: Challenges for Online Retailers
Logistics space shortages have become widespread, particularly near urban population centers where demand for last-mile distribution facilities is highest. Prologis estimates that over the next five years, demand for industrial properties will outpace supply by approximately 140 million square feet in the U.S. alone. This imbalance stems from e-commerce companies racing to establish fulfillment centers closer to consumers for faster delivery times.
Automation as an Efficiency Multiplier
The Prologis research reveals that widespread automation adoption could substantially reduce the need for new industrial space. Under an "aggressive adoption" scenario, the supply-demand gap would shrink to 170 million square feet compared to 290 million in baseline projections. Early adopters already demonstrate automation's potential: JD Logistics recently implemented an automated storage and retrieval system for bulky items that reportedly "significantly improved processing efficiency."
Amazon's robotics investments offer perhaps the most dramatic example, increasing average picking rates from 100 to 300-400 items per hour according to internal data. However, Prologis experts emphasize that automation doesn't require Amazon-scale investments. Even basic solutions like conveyor belts can yield meaningful productivity gains by eliminating repetitive manual tasks.
Automation Options Across the Spectrum
Warehouse automation exists on a continuum from simple mechanical aids to sophisticated robotic systems:
- Conveyor systems: Roller, belt or chain-based transport mechanisms that connect work zones while reducing handling labor and product damage
- Automated sortation: Cross-belt, tilt-tray or sliding shoe systems that accurately route items to destinations at high speeds
- AS/RS (Automated Storage/Retrieval): High-density systems using stacker cranes or shuttles to optimize vertical space utilization
- Robotic picking: Articulated arms or mobile robots that select items with precision while adapting to variable product dimensions
- AGVs/AGCs: Self-guided vehicles that automate material movement while improving safety
- WMS integration: Software platforms that synchronize automated hardware with inventory and order management systems
Implementation Considerations
Successful automation projects require careful evaluation of:
- Return on investment timelines
- Facility adaptability and technology compatibility
- Workforce training requirements
- System interoperability with existing IT infrastructure
- Long-term maintenance needs
Global Success Stories
European retailers demonstrate automation's transformative potential:
- Zalando's German AS/RS implementation accelerated order processing
- ASOS automated sortation systems slashed fulfillment times
- Ocado's robotic grocery picking achieves industry-leading accuracy
The Future of Warehouse Automation
Emerging technologies promise further advancements:
- AI/ML optimization of inventory and demand forecasting
- IoT-enabled equipment monitoring and coordination
- Cloud-based automation control systems
- AR/VR applications for training and process improvement
For e-commerce operators grappling with scarce industrial space, automation presents a compelling alternative to physical expansion. By methodically implementing appropriate technologies, retailers can transform existing facilities into highly efficient fulfillment engines capable of meeting escalating consumer expectations.