E-commerce promotes regional distribution

The explosive growth of domestic and international e-commerce will drive retailers to create more regionalized distribution networks in order to stock products closer to the end customer and simplify the process of product returns.

That is one of the main supply chain ramifications of what's shaping up to be a period of eye-popping growth in Internet sales. Michael DeSimone, chief executive officer of the technology firm FiftyOne Global Ecommerce, predicts U.S.-based e-commerce will grow 10 percent annually through 2015. He also foresees nearly 21-percent compounded annual growth for international e-commerce over the same period.

DeSimone, who spoke at a recent seminar in New York sponsored by the investment firm Stifel, Nicolaus & Co., projected that the international (excluding the United States) e-commerce market would reach US $1.1 trillion in 2015.

The move toward regional distribution networks to handle e-commerce is gaining traction in both the United States and internationally. That's because retailers everywhere face the same challenges: expediting deliveries to the end customer, keeping costs as low as possible to accommodate customers' demands for free shipping, and managing and facilitating product returns.