E-commerce isn’t about speed-to-delivery. It’s about data. So how do we design for it?
E-commerce is transforming the way goods, products, services, and money change hands. But e-commerce isn’t just transferring brick & mortar systems to an online environment. It’s monetizing data.
For years, people have been saying that Amazon is not a commerce company. Amazon is a big data company — it uses data to track demand, logistics to streamline supply chains, and infrastructure to deliver.
Let’s step back a bit. What was the harbinger of big data? Grocery store loyalty cards. We saw the rise of loyalty cards in the 1990s, when grocery stores across the nation raised the price of a gallon of milk by 50 cents and then gave customers who used a loyalty card a 50-cent discount. You can insert whatever price increase and discount you like. The key is: customers everywhere were paying the same price they had before, but providing the grocery company with their data—what they ate, how often they purchased products. Grocery stores suddenly had access to personalized data for how customers ultimately spent their money.
Grocery stores could use this data to make logistical decisions about how to stock their shelves. But they also used it to target TV ads to customers and individualize the way they sell—in turn, this data makes it possible to individualize the way products are designed.
Think about what Amazon, Google, and Visa know about you. Today’s commerce is driven by knowledge of the customer — that’s what makes e-commerce so efficient, so individualized and tuned to your preferences, and at the end of the day, so powerful.
How we design for the data revolution starts with asking what data is doing to change our lives and our consumption—and it starts with infrastructure.
As those Amazon Prime boxes pile up on your doorstep, it means the last mile problem is being transferred from the consumer (how to get to the store) to the company (how to get to the doorstep). And one of the biggest problems data is solving is the last mile problem — how do we visualize and modify our infrastructure networks to streamline the flow of goods?
Given that the vast majority of people live in cities, we’re seeing this data as one of many prods for industrial to go urban. When you think of warehouses and fulfillment centers, you might think of swaths of land in the suburbs, at the edges of cities. But as customers demand quicker and quicker delivery, we’ll see light manufacturing, customization, and fulfillment move into the heart of cities — infrastructural organs that fold into communities.
What does this mean for the marketplace?
- “Nearly 25% of total U.S. leasing demand came from e-commerce companies expanding their footprints in markets where they already had a presence.” [Mehtab Randhawa, Vice President & Associate Director for Industrial Property, JLL]
- “The shift of labor from China to India and Africa is driving more cargo to East Coast Ports through the Suez Canal, supporting further growth.” [Michael McGuinness, CEO, NAIOP New Jersey]
- E-fulfillment requires 3x the labor of traditional warehouses.
How will the design of cities change to reflect these movements?
E-commerce is one of the trends that is unfolding a new design solution to urban industrial—to urban life. And one of the things we’ve noticed is that the last mile problem wouldn’t be a problem if products were created at your doorstep.
We’re looking to a new version of the factory town as one solution — a place where people invent, create, live, learn, and play, all within a neighborhood.
It turns out to be a rather simple solution:
- If e-fulfillment requires 3x the jobs of traditional warehouses, we can site it in cities to increase access to the workforce and reduce the distance to the customer.
- If customers want quicker delivery, we move creative manufacturing centers to their neighborhoods and create participatory fulfillment.
- If customers want individualized, customized products, we locate production in cities so they can interact with the design chain and be participants in the creative process.
The factory town is a design solution that works for companies because it a solution that works for their customers.
KSS Architects is a full-service architecture, planning, and interior design firm in Princeton, New Jersey, and Philadelphia, Pennsylvania. Since our founding in Princeton in 1983, KSS Architects has matured, growing in aspirations, capacity, and caliber. KSS today has a staff of near 60 talented and dedicated design professionals passionate about creating built environments that stimulate learning, commerce, and community. Our clients are leaders in the fields of business, industry, education, development, cultural and social impact. Our mission? To create meaningful and lasting change that impacts our clients, our firm, and our world.