As more people shop for products online, more companies will be looking to open fulfillment centers in the best locations.
According to a 2017 Statista report on global e-commerce, nearly half of Americans prefer to shop online rather than visit brick-and-mortar stores. As technologies continue to evolve and make shopping easier and companies adapt to the changing market, that proportion is likely to grow larger. By 2021, worldwide e-commerce sales are expected to grow threefold — from $1.3 trillion in 2014 to $4.5 trillion, according to Shopify Plus, an e-commerce platform for high-growth merchants.
Increasingly, e-commerce companies looking for logistic hubs have found the Kansas side of the bi-state Kansas City region to be ideal. For years, companies such as Amazon, J.C. Penney, Home Depot, Foot Locker, Target and Walmart have used the Sunflower State's logistical advantages to ship goods quickly.
Hardwired for Movement
The state's road system earned Readers Digest's No. 1 ranking for the best roads in the country back in 2010 — and as a major trucking hub in the heartland of America the state's more than 140,500 miles of roads are well traveled. Easy access to the east and west coasts on I-70, and links from the heartland to Mexico and Canada on I-35 and I-29 make moving goods via ground expedient. The state's more than 122 miles of Missouri River waterfront and eight commercial terminals also provide affordable transportation of goods, as do the state's four Class I and 13 Class III rail carriers.
Several air cargo carriers including Airborne Express, Air Cargo Carriers, Baron Aviation, BAX Global, DHL Airways, Federal Express, UPS and the USPS serve the state. Kansas City International Airport, on the Missouri side, is the primary passenger and cargo service provider for the state and neighboring states of Missouri, Iowa and Nebraska. The Wichita Dwight D. Eisenhower National Airport is another key cargo airport.
"The region's central location and infrastructure mean 85 percent of the U.S. population can be reached from Kansas City within two days or less. That equals huge value for e-commerce fulfillment," says Tim Cowden, president and CEO of the Kansas City Area Development Council.
According to a 2018 Transportation Outlook study produced by KC SmartPort, the Kansas City region has witnessed increased manufacturing growth and an improved intermodal market. In fact, National Real Estate Investor ranked Kansas City the No. 1 mid-country intermodal market. Since opening in 2015, Port KC has also witnessed record growth with a 106-percent increase in tonnage. The terminals in the Kansas City region are predicted to increased annually by 10 to 12 percent. KC SmartPort is a non-profit economic development organization that works to attract freight-based businesses such as manufacturing, distribution and warehouses to the 18-county, bi-state Kansas City region.
Customers in Mind
In September one of the largest online home goods and furniture retailers in the world, Overstock.com, Inc., chose to locate its newest distribution center in the heart of the country. The Utah-based e-commerce company announced it would create over 100 jobs at the 517,000-sq.-ft. (48,030-sq.-m.) facility in Kansas City, Kansas, over the next two years.
"Selecting Kansas City as the home of Overstock's newest fulfillment center allows us to offer over 99 percent of our U.S. customers two-day shipping options, improving shopping experiences by getting orders into the customer's hands as soon as possible," said Overstock.com Vice President of Supply Chain Carroll Morale. "We're extremely thankful for all of the support and collaboration we've received from state and local officials and the Kansas City Area Development Council during this expansion process."
Not one to waste any time, Overstock began operations from the leased facility in October and plans to expand the facility's operations to include returns processing in the future.
"Kansas offers a great central location and the best workers in the country for any company looking to relocate here. We are thrilled that a successful company such as Overstock has selected Kansas City for its latest distribution center," said Governor Jeff Colyer. "Opening for business in Kansas will provide Overstock.com with an excellent strategic location and creates hundreds of well-paying job opportunities for Kansans."
Another e-commerce retailer also selected the Kansas City region for its newest distribution center. Turn5, which sells aftermarket performance products for the auto retail industry, is based in Pennsylvania and is the operating company for AmericanMuscle.com, ExtremeTerrain.com and AmericanTrucks.com. In 2017, the company won EY Entrepreneur of the Year and has earned recognition from magazines such as Inc., Entrepreneur Magazine, SBA and Bizrate. The new operation, located in a 365,000-sq.-ft. (33,910-sq.-m.) space, officially opened its Lenexa location this fall and expects to add 100 jobs over the next three years.
"We are very pleased that Turn5 has chosen Lenexa for their new facility," said Mike Boehm, mayor of Lenexa. "We have a growing number of high-profile e-commerce and logistics centers in our community, and with their focus on customer service, employee engagement and community involvement, they will be a perfect fit. We appreciate their commitment to our city."
"We value our long-term relationships with customers, and connecting with like-minded people from all over the country who share a passion for customizing their vehicles and making them genuinely unique," said Steve Voudouris, CEO and founding partner of Turn5. "Through excellent web design, rapidly growing video content, and award-winning customer service, we tap into our customers' enthusiasm and join them on every step of their journey. Our presence in Kansas will help us expand our fulfillment operation and create better customer experiences."
Companies that decide to make a home in the region often find that growth is inevitable. Take Shamrock Trading Corporation, for example. The company and its affiliated companies provide services for the transportation industry, with offices in Chicago, Dallas and Nashville. But headquarters has been in the Kansas City suburb of Overland Park, Kansas, for years. In July, Shamrock announced a major expansion to its operation in Overland Park that will create more than 1,000 jobs with an average wage of $56,000. The company's employee base has skyrocketed by 175 percent over the past three years.
Since Shamrock has offices across the U.S., it considered locating the expansion in other states, but ultimately decided on Kansas due to the state's overall business climate and workforce. The expansion is awaiting approval from the city council to build three multi-story office buildings on 30 acres (12 hectares) across from the company's existing headquarters, which will be demolished.
"This location could be ideal for the expansion of our current campus," said Shamrock COO Tom Sullivan. "Shamrock has its roots here in this community. For three straight years, we've been named one of the Best Places to Work in Kansas City because we genuinely care about our people. If they're happy, we're happy."