German logistics company DHL is about to expand its e-commerce operations in the U.S. by 40 percent.
Looking to capitalize on the second largest online shopping market after China, DHL said Wednesday that it will invest $137 million into the U.S. domestic and cross-border e-commerce market.
To increase its e-commerce footprint in the U.S., DHL will add eight new distribution centers and expand two that it’s already operating in Los Angeles and Columbus, Ohio, between now and 2020. Currently, DHL has 20 distribution centers across North America.
The market for goods headed to online shoppers buying across borders is expected to grow from a current $400 billion, to $1 trillion in global volume by 2020.
“There is barely any other industry that provides such a promising outlook than the e-commerce business,” Charles Brewer, CEO of DHL eCommerce, said in a statement. “It is expected that one billion people will shop online and across borders by 2020 with the U.S. being the most popular origin for 25 percent of consumers worldwide.”
These new facilities will mean brands and retailers will be able to place inventory closer to their consumer in order to respond to the growing demand for ‘buy now, want now.’
According to DHL, emerging markets are going to fuel what’s expected to be a 28 percent annual growth rate in cross-border e-commerce, followed by Western Europe and North America. With China’s growing middle class (which is expected to reach 630 million people by 2022), the bulk of the buying power will come from the Asia Pacific, accounting for 48 percent of the total volume.
“Research shows that consumers increasingly buy products online that are either unavailable or too expensive in their home country,” DHL said. “The biggest share of these cross-border purchases will revert back to U.S. e-commerce businesses, among other reasons because consumers covet products tagged with the ‘Made in the U.S.’ label.”
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DHL’s new operations will also help ensure more orders have definite day deliveries and support for domestic and international services.
“We provide the most comprehensive e-commerce platform for international trading ventures, thanks to our different divisions’ expertise along the entire supply chain, whether it is warehousing or transportation,” DHL said.
As logistics demands shift with consumers’ preferences for e-commerce, companies are finding new ways to innovate and to cater to the need.
DHL’s Parcel division announced a partnership with Smart car this week that will let owners of the compact cars use their vehicles as mobile addresses and have DHL deliver the goods directly to their trunks within a certain time slot—and the whole deal is coordinated via a mobile app.
The offering is still in pilot stages in select cities in Germany, but DHL said it is using the knowledge gained to “develop a new and attractive service for a young, extremely online savvy target group.”