A report recently issued by San Francisco-based real estate investment trust Prologis lays out the ongoing, and still growing, impact of e-commerce on not only logistics real estate, but also logistics and supply chain strategies as well.

The report, entitled “The E-Commerce Boom Isn’t Over: Implications for Logistics Real Estate,” examines how more than five years after the onset of the Covid-19 pandemic and the subsequent re-opening of the economy, recent consumer behavior is showing a return to value, convenience, and choice, while examining retailers, supply chains, and logistics real estate, as it relates to e-commerce going forward.

Prologis presents various findings, highlighted by supporting data, which point to the fact that the e-commerce supply chain continues to represent the highest percentage of e-commerce activity, with an eye on more growth and development. These findings include:

• e-commerce sales representing more than half of retail sales growth (which excludes autos, gasoline stations, and food services and focuses on goods trade), at 56% in 2024, marking an 8.0% annual increase, compared to 1.8% for in-store sales;
• U.S. companies increasing logistics footprints over the last five years, as retail footprints shrink, with occupied U.S. logistics space having grown 12%, going back to the pre-pandemic period, and occupied retail space, excluding services retail, down 2.4%;
• e-commerce’s share of new logistics real estate demand topped pre-pandemic averages, with the proportion of new leasing by e-commerce companies up more than 19% in 2024 over 2023, as well as the 18% average, from 2017-2019;
• 2024 e-commerce space requires three times the logistics space of in-store sales, with U.S. e-commerce penetration pegged to hit 30% by 2030, topping the current level at 24%, which Prologis said would result in 250 million-to-350 million square-feet of U.S. logistics space demand over the next five years; and
• cross-border e-commerce expansion continuing to drive demand for logistics space in gateway markets and last-mile distribution locations

In an interview with LM, Prologis Vice President of Research Melinda McLaughlin said with e-commerce sales representing more than 50% of total retail sales activity, it serves as an indication that, going back to the pandemic, the way in that consumers buy goods has fundamentally changed through e-commerce—and continues to change. And she added that is against the backdrop of the narrative that retail real estate place is actually doing very well, whereas much of that space is being occupied by fitness, centers, arcades, and restaurants, which are focused on experiences instead of purveying goods.

“In addition to kind of the lack of options in-person, there are all of these supply chain investments that we can see behind the scenes, which just means there’s more and more stuff you can get [online] reliably, today or tomorrow, with that fast delivery time and investment,” she said. “Online shipping is perceived as good value. I think all the survey data would tell you a lot of consumers check for pricing online as well. So, we’ve got value, we have convenience, and we have product variety. Because of these advancements as consumers, I feel like we are also feel very entitled to get, literally, almost anything we want online. The runway has not run out, and we see really clear evidence that there is a lot of momentum here.”

The report also addressed the impact of the possible removal, reduction of, de minimis charges, which allows goods under $800 sent from China to the U.S. to not be subject to tariffs. It explained that while de minimis imports account for only roughly 2% of U.S. goods imports and 4% from Asia, companies relying on “built to order” models via airfreight will have to adapt. What’s more, should de minimis exclusions be removed, the report said it will “necessitate a shift toward lower-cost maritime shipping, longer delivery times, and domestic inventory-holding strategies, with supply chains that more resemble existing U.S. e-commerce players.

The de minimis charges are the result of a few different things, according to McLaughlin, with one being the growth of this underlying business, or value-based e-commerce, with many of its target customers being teenagers, for fast-fashion through retailers like Shein, Timu, and TikTok Ship, adding that it remains an under-penetrated segment.

“These businesses have been absolutely booming, so they’ve got their growth trajectory intersecting, of course, with some of the political challenges, in a very fluid environment,” she said. “The U.S. has the highest de minimis rate globally, and so been sort of in the crosshairs for a while. There is still a lot of uncertainty about what ultimately happens. But I think even if you set that aside, the growth of the business had already seen them start to partner with more domestic based companies to offer a broader product variety. Air cargo does not work for furniture, for example, which is the most expensive method of transport. In the early, fast growth of those businesses, they were focused on very small, very light products, and then over time, diversified.

We had already seen them starting to establish more of a traditional domestic, U.S.- based supply chain. I would keep in mind, for some of these Asia-based companies, right, the US is maybe 40% of their sales. With the uncertainty around trade policies, I think it’s making more sense, right, to invest along that continued growth. It’s more advantageous to do more of the traditional, lower cost maritime shipping and have goods stored within the U.S. borders at least some portion of their business.”