THE STATE OF THE ECOMMERCE FACILITIES SERVICES INDUSTRY

Survey + Insights

The approach to facilities services management ranges throughout the ecommerce space. A recent survey from based on a cross-section of leading ecommerce companies, retailers, wholesale distributors, and third-party logistics providers uncovers results within four key areas of how ecommerce facilities are managed, their plans for innovation, current operational and labor issues, and the opportunities to overcome challenges within the industry. Discover insights for your facilities services with this survey analysis.

I. ECOMMERCE FACILITY MANAGEMENT STRATEGY AND MEASUREMENT

This section of the report analyzes how ecommerce facilities are managed, how performance is measured, and how facility service outcomes are being improved.

QUESTION 1. Does your current innovation plan include your #1 facility management strategy?

Thirty-nine percent of the respondents say their company's innovation plan includes a facility management strategy. The response to the questions suggests there are three schools of thought in the ecommerce space in regards to how they view facility management and related services. Over one-third (39%) include their facility management strategy in their company's innovation plan. Exactly one- third, according to the findings, do not include a facility management strategy as part of their innovation plan. And the final group, nearly one-third (28%), simply do not have a company-wide innovation plan.

Percentage of retailers with an innovation plan as part of their facility management strategy:

• 28% NO PLAN
• 33% NO
• 39% YES

QUESTION 2. How would you describe your current facility #2 management direction? SELECT ALL THAT APPLY.

A high percentage of ecommerce companies say they are pleased with their current facility management process.

• We're happy with 80% in-house facility management
• We're happy 39% with our multiple vendors
• We're unhappy with in- 3% house management and considering service vendors
• We're unhappy with current 3% service vendors and looking to change
• We're looking for 2% a total facility service partner
• 5% Other

QUESTION 3.Which of the following facility services or needs do you manage in-house, and which do you outsource to a service provider? #3

A high percentage of ecommerce companies say they are pleased with their current facility management process.

FACILITY SERVICE

• Grounds Maintenance
  • In-house management 29%
  • Outsourced to facility services provider 59%
  • Don't use/ not applicable 12%
• HVAC
  • In-house management 34%
  • Outsourced to facility services provider 54%
  • Don't use/ not applicable 12%
• Electrical Power and Safety
  • In-house management 46%
  • Outsourced to facility services provider 45%
  • Don't use/ not applicable 9%
• Janitorial
  • In-house management 48%
  • Outsourced to facility services provider 44%
  • Don't use/ not applicable 8%
• Specialty Services
  • In-house management 40%
  • Outsourced to facility services provider 32%
  • Don't use/ not applicable 28%
• Facilities Engineering
  • In-house management 53%
  • Outsourced to facility services provider 31%
  • Don't use/ not applicable 16%
• Flex Staffing
  • In-house management 47%
  • Outsourced to facility services provider 28%
  • Don't use/ not applicable 25%
• Parking
  • In-house management 54%
  • Outsourced to facility services provider 26%
  • Don't use/ not applicable 20%
• Lighting
  • In-house management 67%
  • Outsourced to facility services provider 21%
  • Don't use/ not applicable 12%
• Integrated Facility Management
  • In-house management 58%
  • Outsourced to facility services provider 15%
  • Don't use/ not applicable 27%

QUESTION 4. Do you measure the impact of your facility services on any of the following? Two-thirds of the respondents measure their facility services

Two-thirds of the respondents measure their facility services performance impact on overall company productivity. Forty-nine percent measure facility services performance impact on labor costs. Facility services management impact on employee engagement is measured by 40% of the respondents.

• Productivity - 66%
• Labor costs - 49%
• Employee engagement - 40%
• Innovation goals - 25%
• Sustainability metrics - 25%
• None of the above - 16%
• Other - 3%

KEY INSIGHT: Impact on company productivity is the key facility service management metric

Ecommerce companies, retailers, and their facility service providers and partners mainly measure the impact of their facility services on company productivity. That is by far the most important measure. Other important measurement factors are the impacts on labor costs and employee engagement.

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QUESTION 5. If you measure the impact of your facility services, please explain the measurement process.

Key themes from the write-in comments include:

• Revenue and sales analysis
• Cost analysis
• Labor time management
• Productivity
• Customer satisfaction and related metrics
• Employee feedback
• Safety metrics
• Combination of various metrics and measurement

QUESTION Which of the following best describes your approach to future facility capital costs? #6

SELECT ALL THAT APPLY.

Forty-nine percent of ecommerce companies take a preventative maintenance approach to better managing future facility capital costs. Forty-two percent practice proactive maintenance. Only 28% take an asset lifecycle management approach.

QUESTION 6. Which of the following best describes your approach to future facility capital costs?

Forty-nine percent of ecommerce companies take a preventative maintenance approach to better managing future facility capital costs. Forty-two percent practice proactive maintenance. Only 28% take an asset lifecycle management approach.

• 49% Preventative maintenance
• 42% Proactive maintenance
• 28% Asset lifecycle management
• 23% Defer maintenance until there's a need
• 14% No defined approach
• 3% Other

QUESTION 7. If you don’t do preventative maintenance, have you measured your repair and replacement spend?

Most companies that do not take a consistent preventative maintenance approach also have not measured their repair and replacement spend. Percentage of retailers that have measured their repair and replacement spend - if preventative maintenance is not a priority:

• 21% YES
• 36% N/A
• 25% NO
• 18% UNSURE

QUESTION 8. What have you done over the past 12-18 months to improve your facility service outcomes? SELECT ALL THAT APPLY.

Over the past 12 to 18 months, the respondents employed a variety of methods to improve their facility service outcomes. Forty-three percent improved the internal management and staff communications process, followed by 27% that added software or technology to improve their facilities and staff performance. One out of four respondents say their companies have also improved communications with facility service provider teams and with customers.

FACILITY SERVICE IMPROVEMENTS:

• Improved communications process internally with management and staff - 43%
• Added software or technology to improve the process - 27%
• Improved communication with facility service providers - 26%
• Improved communications process with customers - 25%
• Worked with consultants - 17%
• Changed or added facility service providers - 16%
• Currently analyzing this area - 14%
• Integrated more operations with one service provider - 8%

KEY INSIGHT: Facility service performance improvements have resulted from improved communications with stakeholders as well as from new software and technology

The research results suggest more facility service improvements have resulted from better communications from management with their staff, service providers, and customers, along with the addition of new facilities management or automation software and technology.

QUESTION 9. If you perform preventative maintenance, does your own staff or a service provider map your asset lifecycle costs?

Forty-four percent of ecommerce companies use their own staff to map their asset lifecycle costs. One-third use facility services providers for this analysis.

• Our staff - 44%
• Service provider - 33%
• Neither - 19%
• Not applicable - 17%

THE STATE OF THE ECOMMERCE FACILITIES SERVICES INDUSTRY

Survey + Insights

II. TECHNOLOGY AND INNOVATION

This section covers the facility management technologies currently in use and that ecommerce companies are planning to invest in over the next two to three years. An open-ended question is also included, asking for the other services, innovations, and/or added value they would like to see from leading companies in the outsourced facilities services industry.

QUESTION 1. Which of the following technologies are you 1 currently using or planning to invest in over the next two to three years?

Less than 40% of the respondents are currently using sensors, predictive analysis, building automation, loT, or robotics. Over 30% of the industry plans to invest in predictive analysis, building automation, and robotics over the next few years. These findings suggest that the next few years may continue to see significant technology investment related to ecommerce facilities.

• Sensors
  • Currently utilize - 39%
  • Plan to invest in over next 2-3 years - 28%
  • Have no plans to use - 33%
• Predictive Analytics/Data
  • Currently utilize 34%
  • Plan to invest in over next 2-3 years - 27%
  • Have no plans to use - 22%
• Building Automation
  • Currently utilize 27%
  • Plan to invest in over next 2-3 years - 37%
  • Have plans to use - 35%
• IOT
  • Currently utilize 22%
  • Plan to invest in over next 2-3 years - 26%
  • Have no plans to use - 52%
• Robotics
  • Currently utilize 11%
  • Plan to invest in over next 2-3 years - 35%
  • Have no plans to use - 54%

QUESTION 2. What other services, innovations, and/or added value would you like to see from leading companies in the outsourced facilities services industry?

Key themes from the write-in comments include:

• New technologies
• Automation and robotics
• Cost and efficiency improvement

SELECT RESPONSES:

• "It would be helpful if we could work with facility management experts on Al capabilities, automation, robotics, and the like. I need more guidance for better use of my facilities with regards to effective cost savings. We're also looking at more in-house systems controls."
• "D2C enhancement and smarter technology would be a plus."

THE STATE OF THE ECOMMERCE FACILITIES SERVICES INDUSTRY

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III. OPERATIONS, LABOR, AND SERVICE PROVIDERS/PARTNERS

Along with the critical issue of how facility operations have been changed due to the pandemic, this section also covers other operational and labor issues in-depth.

QUESTION 1. What have your facilities operations done in terms #1 of specific operational tasks or changes due to the impact of the COVID-19 pandemic?

Key themes:

• Increased sanitation practices and cleaning schedules
• Practicing social distancing
• PPE for staff
• Increased signage on safety and sanitation
• Facility staff pay or bonus changes
• Added or changed work shifts
• Remote working

SELECT RESPONSES:

• "There was a brief shutdown and a major cleaning. Afterwards we created social distance training and put up protective barriers in machine processing areas. We wear masks and gloves at all facilities in addition to our new cleaning and sanitation program."
• "PPE is mandatory and we implemented increased cleaning. There's also less overlap between shifts and more distance between employees."

QUESTION 2. What safety challenges are you facing?

Half of the respondents indicate they are not facing meaningful safety challenges. Still, 18% of the respondents indicated "other worker injuries" are a safety challenge.

• Other worker injuries - 18%
• Damaged equipment/ product - 14%
• Inadequate safety training - 14%
• Slip & falls from product spills - 11%
• Poor indoor air quality - 10%
• Slip & falls from dust - 6%
• Other - 0%
• None of the above - 50%

QUESTION 3. Which of the following labor challenges are you currently facing? SELECT ALL THAT APPLY.

The top three most-often cited labor challenges are short staffing during peak times of the year, increasing productive hours compared to total hours, and staff health concerns. Thirty percent of the respondents indicate their company has employee retention issues.

• Short staffing during peak periods - 40%
• Productive hours vs. total hours - 39%
• Health concerns - 35%
• Employee retention issues - 30%
• Time and cost of employee training - 28%
• Excessive non-core tasks - 18%
• Comfort or safety complaints -18%
• High turnover costs - 17%
• Excessive or increasing sick days - 16%
• Union labor issues - 1%
• Other - 1%
• None of the above - 17%

QUESTION 4. Which of the following sustainability strategies most interest you? SELECT ALL THAT APPLY.

Just under half of the respondents (49%) say solar energy programs are the sustainability strategy of most interest to their companies. This is followed by waste management.

• Solar energy program - 49%
• Waste management - 45%
• LED lighting retrofits - 31%
• Recycling of pallets - 27%
• Becoming LEED certified - 25%
• EV charging - 15%
• Other - 9%

QUESTION 5. Do you have a preventative maintenance program for any of the following or do you repair and replace as you go?

HVAC is the area with, by far, the most preventive maintenance programs in place, according to the survey respondents. This is followed by power distribution, although a much smaller percentage of respondents have a preventive maintenance program in place for this area.

• HVAC
  • Have program - 59%
  • Repair/ replace as needed - 30%
  • N/A - 11%
• Lighting
  • Have program - 21%
  • Repair/ replace as needed - 69%
  • N/A - 10%
• Power Distribution
  • Have program - 27%
  • Repair/ replace as needed - 47%
  • N/A - 26%
• Building Envelope
  • Have program - 23%
  • Repair/ replace as needed - 42%
  • N/A - 35%

KEY INSIGHT:

• Most companies lack a preventative maintenance program for lighting, power distribution, and the building envelope
• While 59% of ecommerce companies with warehouse facilities have a preventative maintenance program in place for HVAC, only between 21% and 27% have a similar program for power distribution, the building envelope, or lighting.

QUESTION 6. What are any new developments, trends, or issues that you need your in-house or outsourced facility services provider(s) to be aware of or focus on?

Key themes from the respondent comments:

• New technologies and trends
• Sanitation best practices
• Facility services operations best practices and trends
• Understanding client strategy and goals
• Flexibility

OTHER HOT TOPICS AND COMMON CONCERNS:

• Health and safety improvements
• HVAC innovations
• COVID-19 ongoing support
• Artificial intelligence

SELECT RESPONSES:

• "Changing technology and the ability to remotely troubleshoot."
• "New concepts or technologies that will enable us to manage our facilities' condition and keep costs minimized."
• "Define a 'What's Next' strategy with scenarios"
• "The ability to quickly scale up or downscale operations."

THE STATE OF THE ECOMMERCE FACILITIES SERVICES INDUSTRY

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IV. CHALLENGES AND OPPORTUNITIES

The responses to open-ended questions on the key challenges and opportunities impacting ecommerce companies, retailers, wholesale distributors, and third- party logistics providers are in this section. Very often, and not surprisingly, the top challenges are also closely related to the key opportunities.

QUESTION 1. What are the biggest challenges related to your facilities services management process or model?

Common themes in the write-in responses include:

• Managing pandemic impact and new health concerns and procedures/protocols
• Cost control
• Staff management, training, and retention
• Management priorities and budgets
• Increasing speed and efficiency
• Managing complex and multi-building/site locations

OTHER HOT TOPICS AND COMMON CONCERNS:

• Health and safety improvements
• Efficiency vs. fast-track
• Internal communication
• Funding priorities and management
• Staffing in peak periods
• Safety precaution measures

QUESTION 2. What are the biggest opportunities for your #2 facilities services management process or model?

The top three most often cited labor challenges are short staffing during peak times of the year, increasing productive hours compared to total hours, and staff health concerns. Thirty percent of the respondents indicate their company has employee retention issues.

The most often mentioned opportunities include:

• Automation, technology, and efficiency strategies
• Innovation
• Flexibility
• Staff management and training
• Preparing for economic rebound and changes

OTHER HOT TOPICS AND COMMON CONCERNS:

• Expansion of services
• Centralized control
• Store/warehouse size and growth
• Recycling improvement
• High return on investment
• Safety precaution measures
• Going green
• Cycle inventory counts
• Staff management and training

THE STATE OF THE ECOMMERCE FACILITIES SERVICES INDUSTRY

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CONCLUSION

This is a time of challenge and change for nearly all industries and companies around the world. The ecommerce facilities services industry is in a unique position. The industry is facing a combination of long- term growth trends, primarily driven by the consumer shift to online commerce, and the new operational changes that are required due to the COVID-19 pandemic.

These dual challenges are forcing ecommerce companies to be creative and innovate, but the diverse industry is responding at varying speeds and with different levels of investment. Facilities services need more strategic attention to respond to accelerated demand trends, and also to deal with the increased management complexity as a result of dramatically increased health and safety requirements.

Many ecommerce companies as well as key wholesale distributors and third-party logistics providers plan to continue to invest in technology. Based on the survey findings, within two to three years the majority of the industry will be using predictive analysis and adding more sensors and building automation technology. And by that time, i.e., the 2022 to 2023 period, close to half of the survey respondents expect to also be investing more in loT and robotics. If these forecasts hold the next few years should see a strong period of ecommerce facilities technology investment.

Facility Management Technology Investment and Utilization Outlook for the Next Two to Three Years

As we continue to navigate the pandemic and move into a post-pandemic recovery period, this time can be seen as an opportunity for a pivotal moment when facilities services are seen in a new, more important light by ecommerce and retail leaders.

• Predictive analytics/data
  • Currently utilize - 34%
  • Plan to invest in over next 2-3 years - 38%
  • Estimated total % of industry using in 2-3 years - 72%
• Sensors
  • Currently utilize - 39%
  • Plan to invest in over next 2-3 years - 28%
  • Estimated total % of industry using in 2-3 years - 67%
    

• Building automation
  • Currently utilize - 27%
  • Plan to invest in over next 2-3 years - 37%
  • Estimated total % of industry using in 2-3 years - 64%

• Building automation
  • Currently utilize - 22%
  • Plan to invest in over next 2-3 years - 26%
  • Estimated total % of industry using in 2-3 years - 48%