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Cushman & Wakefield: Competition rising for holiday shopping storage space in 2022

Xuan Pham • 05/10/2022

In the last 3 months of the year, online shopping demand is expected to drive up inner-city warehouses’ occupancy rate 

After two years of the pandemic, Vietnam's e-commerce market still maintains a stable growth rate of 16% annually, with sales reaching US$13.7 billion in 2021, according to the Vietnam Ministry of Industry and Trade’s report. The report also stated that Vietnamese spend up to 6.38 hours a day browsing the internet, of which 58.2% make weekly online purchases. This trajectory of growth is expected to continue because of changing shopping habits and the convenience of online payment. The Ministry of Industry and Trade forecasts that the e-commerce market will reach US$16.4 billion in sales this year.


Leading the group of e-commerce platform providers are Shopee, Lazada, Grab, Baemin, Tiki, GoJek, Sendo, ShopeeFood, Be and AhaMove. Trang Bui, CEO of Cushman & Wakefield Vietnam, commented: “Once the order is confirmed, the delivery race begins. Delivery within the same day is expected, some even offer 2-hour express service and quite a few companies operate their own delivery team to reduce dependence on third-party logistics (3PL). Customers want to receive their orders as quickly as possible, putting pressure on the last mile of the delivery journey.”

As consumers’ purchasing patterns tend to change with the seasons, the e-commerce supply chain therefore must be flexible. Shopee's biggest sales event at the end of 2021 has recorded a 14-fold increase in Shopee Mall orders, and platform visits increased 6 times compared to normal days. Lazada also recorded 6-fold sales in hot categories such as beauty, household goods and electronics, at the recent super sale event on September 9, 2022.

The last 3 months of the year will come with festive events accompanied by attractive promotional campaigns such as Black Friday, Singles Day 11/11, Christmas and New Year. It is expected that the number of orders will surge in these periods for accessories, holiday decorations, fashion, confectionery and beverage, cosmetics, electronics, consumer goods...

For the second quarter of 2022, the amount of warehouse supply Cushman & Wakefield recorded in Ho Chi Minh City reached 705,000m2, with the average rental price of US$5.4/m2 and Hanoi at 180,000m2, the average rent at US$5.2/m2. The average occupancy rate of the two cities is 91%. According to our observations, retailers usually start searching for warehouses around June every year, and sign short-term leases in preparation for the festive season. Peak-season warehouse occupancy rates sometimes can go up to 100%.

Trang Bui continued, “Retailers and e-commerce operators will have to be extremely flexible in the logistics chain to meet the demand according to the seasons of festivals and promotions. An ideal last-mile warehouse needs to harmonize geographical and human factors like a good location, close to a dense residential area, and an abundant labor source.”

However, the supply of professional warehouses meeting the above requirements is almost nonexistent in the inner city of Ho Chi Minh City and Hanoi. Businesses looking for last-mile warehouses will often have to look towards townhouses to store, pack and deliver goods. With the constrained nature of common townhouses, these make-shift warehouses need to operate continuously to avoid accumulating orders. Factors such as fire protection, workers' health as well as the ability to store heat-sensitive orders are also concerning.

Therefore, it is necessary to build and apply smart order management and retrieval system, from the time when orders are placed, packed, shipped, and delivered to the end user in the fastest and safest way. At these storage and fulfillment warehouses, new technologies such as robots, drones and sensor systems that can record inventory quantities or detect fire risks will help create a more efficient, streamlined process. The business that can apply technology to sort and accurately quantify the time to deliver goods will be the winner.

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