How Amazon And Same Day Delivery Will Effect Retail Commercial Real Estate

4877 words - 20 pages

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How Amazon and Same-Day Delivery Will Effect
Retail Commercial Real Estate by:
Ryan Mitts
FIN 5433
Dr. Tony Ciochetti
03/30/2013

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TABLE OF CONTENTS
EXECUTIVE SUMMARY....................................................................................Pg. 1
INTRODUCTION.................................................................................................Pg. 2
THE STATE OF RETAIL REAL ESTATE.........................................................Pg. 3
THE THREATE OF E-COMMERCE TO RETAIL REAL ESTATE..............Pg. 4
IMPLICATIONS OF SAME-DAY DELIVERY.................................................Pg. 7
THE FUTURE OF RETAIL REAL ESTATE.....................................................Pg. 9
CONCLUSTION...................................................................................................Pg. 11
REFERENCES......................................................................................................Pg. 12

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EXECUTIVE SUMMARY
Real estate throughout the world suffered a huge shock during the financial downturn of
the late 2000's, and while the vast majority of other sectors are on the mend, the retail sector still
seems to be having a bit of trouble getting back to where they were before the crash. A large
reason for this has to do with Amazon and other online retailers taking up a larger and larger
share of the available sales forcing many companies into rethinking their business plan, leading
to store closures, downsizing, and even bankruptcies. The companies that do seem to be
adapting to the new world of internet commerce, have adopted plans that require not just fewer,
but smaller stores. This has left a huge hole in many shopping centers that may never recover in
this new economic reality.
How these giants of retail have been humbled by what started as just another internet
startup during the dotcom boom is amazing in retrospect. Amazon has figured out a way to
upend the system, doing away with the need for physical stores and the incredibly high costs of
real estate and hiring employees to man all of those stores. Amazon, and other online shops,
have been able to break so strongly into the market partially because of their ability to offer the
same products at a lower cost, and even the products which cost the same, came sales tax free.
Because of a legal loophole, online stores have not had to collect sales tax on purchases as long
as they don't have a physical presence in that state. The last bastion of hope for the brick and
mortar stores has been their ability to fulfill customers desires for instant gratification. While
Amazon has gotten their shipping times much quicker than when they first started, up until now,
they haven't been able to break into one of their highest priorities, affordable same-day delivery.
Now Amazon has begun a massive campaign to make same-day delivery a reality through
building an impressive infrastructure of distribution centers throughout the country. Not only
will this remove...

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