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Viewpoint: What Does Wal-Mart’s New Free Shipping Service Mean to Industrial Real Estate?

It’s the battle of the giants as both Amazon and Wal-Mart up their games with same-day delivery to consumers in select markets.

The NAIOP Research Foundation asked Dr. Joshua A. Harris, CAIA, a NAIOP Research Foundation Distinguished Fellow and director of the Dr. P. Phillips Institute for Research and Education in Real Estate University of Central Florida, to share his outlook on the head-to-head competition:

Josh Harrisi headshotThis may be the ultimate showdown between the low-cost leader of the 20th century vs. the low-cost leader of the 21st century. Thus, just like Amazon, Wal-Mart will likely need to build specialized rapid distribution centers near major population hubs if they hope to be successful. In response, Amazon will have to quicken their plans to open such facilities to stay competitive. Suppliers to both of these firms may seek to locate facilities nearby these distribution centers so they can compete effectively. The net effect will be increased demand for distribution centers and warehouses, but most will probably need to be built to suit.

Wal-Mart and Amazon have been in direct competition in strategies beyond delivery. STORES magazine says that while Amazon’s total online volume dwarfed Wal-Mart’s in 2013-2014, Wal-Mart’s 30 percent increase in web sales outpaced Amazon’s 20 percent.

Wal-Mart’s growth in e-commerce is no minor achievement: it is rated the No. 4 performer in online retailing, says Internet Retailer, behind Amazon, Apple and Staples.

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