Proving the Business Case for the Internet of Things

DHL to invest $137m in US e-commerce market

Steve Rogerson
August 9, 2016
Deutsche Post DHL Group plans to invest $137m in the US domestic and cross-border e-commerce market. The group's objective is to exploit the global B2C e-commerce market for shipments crossing borders, which is expected to grow from $400bn today to a total global volume of $1tn in 2020.
Since US online merchants take the leading role in selling internationally, DHL e-commerce will make investments in the USA in the next years and expand its capabilities to serve businesses selling abroad. The announcement was made with the DHL e-commerce and supply chain divisions further implementing regionalised fulfilment centres in Los Angeles, Columbus, Ohio, and New Jersey, increasing the companies' order fulfilment capabilities in North America collaboratively.
"There is barely any other industry that provides such a promising outlook than the e-commerce business," said Charles Brewer, CEO for e-commerce at DHL. “It is expected that one billion people will shop online and across borders by 2020 with the USA being the most popular origin for 25 per cent of consumers worldwide. With our investments we lay the foundation to expand our leading role in cross-border e-commerce logistics, serve our US customers with the best possible infrastructure and gain future market shares.”
DHL is looking to profit from these developments and to increase its e-commerce footprint in the USA.
The first order fulfilment centre opened in Columbus, Ohio, last year and was followed by a facility in Los Angeles. DHL now intends to establish further regional centres of this kind in New Jersey and other locations in 2017.
Additionally, DHL Express has opened a $1.3m service centre in Chicago to meet heavy demand from e-commerce customers. And a year ago, DHL Global Forwarding opened up a $35m distribution centre in Chicago. All of these infrastructural engagements will provide merchants with the opportunity to place inventory closer to consumers to speed-up delivery.
Today's global B2C cross-border e-commerce market comprises approximately $400bn and is expected to expand rapidly. Particularly emerging markets are going to fuel the estimated annual growth rate of 28 per cent, followed by Western Europe and North America. Thanks to China's growing middle class, which will reach 630 million people by 2022, most of the purchasing power will come from Asia-Pacific and equal about 48 per cent of the total volume.
Research shows that consumers increasingly buy products online that are either unavailable or too expensive in their home country. The biggest share of these cross-border purchases will revert back to US e-commerce businesses, among other reasons because consumers covet products tagged with the "Made in the USA" label. DHL is looking to benefit from these developments and increase its e-commerce footprint in the USA.
The planned expenditure of $137m until the end of 2020 will be used for the further expansion of fulfilment capabilities by adding eight distribution centres and enhancing two existing facilities in Los Angeles and Columbus, Ohio. The investment will also expand day definite deliveries and enhancements to support domestic and international services.
"We provide the most comprehensive e-commerce platform for international trading ventures, thanks to our different divisions' expertise along the entire supply chain, whether it is warehousing or transportation,” said Brewer. “For consumers shopping abroad, and also for businesses, it is of utmost importance that international deliveries are reliable, safe and convenient. We provide that with our network every day in every way."
In North America, the company operates 20 distribution centres, including four international gateways and one centre each in Toronto and Mexico City. Further facilities in Latin America are to follow next year. In the USA, DHL operates 18 e-commerce distribution centres and is one of the largest partners of the US Postal Service (USPS). It is thus able to dive deep into the USPS mail stream to increase pre-sorting discounts and achieve speed-to-market.