E-Commerce Requires Jobs For Robots

Like Hansel in the movie Zoolander, robots and automation are “so hot right now.” Books, articles, and television segments on automation, robotics, and the future of work are coming to dominate the Zeitgeist. People are becoming increasingly aware that automation and robots are going to be important — and unavoidable — parts of their working and non-working lives. One of the core reasons that robots have become so hot is that their use is being fueled by in-hand retail.

Question: What percent of U.S. retail sales do you think comes from e-commerce?

U.S. e-commerce as a percent of all retail sales has been rising -- and it is going to rise further. In order to meet the demand of an accelerated pace of e-commerce, we need to go beyond what humans can do. Historically, the U.S. distribution supply chain involved shipping goods from warehouses to retail stores by pallets or batches. Individuals would then go to retail stores to acquire their goods. The processing of single piece orders -- as opposed to larger batch orders -- has created an unsubstitutable need for robotic and automated material handling solutions in warehousing and distribution parts of the U.S. and global supply chain.

E-commerce has created an unsubstitutable need for robotic and automated material handling solutions in warehousing and distribution parts of the U.S. and global supply chain.

E-Commerce and Jobs

While the growth of e-commerce has helped fuel a booming need for robots and automation, e-commerce is still a relatively low percent of total retail sales. In fact, data released last week from the Census Bureau showed that in Q1 2017 reached at a new record percent of all retail sales -- but that rate was still only at 8.5 percent of all retail sales.

The continued rise in e-commerce has weighed on retail trade jobs at department stores. In fact, BLS data show that department store retail jobs have fallen sharply since 2010.

Despite what you might have gleaned from the general press, brick and mortar is still how the vast majority of retail happens. In fact, 91.5 percent of all U.S. retail sales occurred at brick and mortar retail in Q1 2017. But that will change, and the warehouse and distribution system is not set up to handle that much e-commerce – especially not with human workers. And the strain is likely to rise, as consumers increase e-commerce activities -- and they are unlikely to accept a decline in delivery performance.

In-hand retail is going to be a thing that continues to drive the need for automation and robotics in a very positive way. It is also something that will continue to stress the U.S. supply chain and the abilities of material handling equipment and technology to keep up with demand that is going to rise much further. And while the current challenges of in-hand retail demand have currently put pressure on warehouse and distribution channels, the next big wave of challenges are what supply chain and material handling professionals call "last mile issues."

How Many Robots Will We Need When E-Commerce Doubles?

Many of you have likely noticed the increased number of parcel shippers, mail trucks, and individual freelancers delivering packages for items people you and your neighbors may have ordered online. There are people going in and out of my street all day long -- seven days per week. And yet e-commerce is only 8.5 percent of retail sales.

So, what happens when U.S. e-commerce doubles to just 17% of all retail sales? In truth, there just aren't enough people to drive and deliver all the items we will be buying. And we aren't even talking about e-commerce jumping to 30 or 50 percent! We are just talking about 17%.

When people worry about robots, I ask them: who will deliver all of these retail goods? We know that robots are doing the sorting, pulling, and packing now. But how many robots will we need when e-commerce is 17% of retail sales?

All of the robots.

That's how many we'll need.

For market, business, and futurist tweets, follow me on Twitter at:  @PrestigeEcon

• Sign up for my free Newsletter and Podcasts - The Financial Futurist -at www.jasonschenker.com
• Check out Jobs for Robots: www.jobsforrobots.com

Best,

- Jason Schenker

Tags: #futureofwork #automation #robots #robotics #jobsforrobots #jobs #economy #AI #ecommerce #tech #supplychain #materialhandling

Jason Schenker is the author of multiple books, including Commodity Prices 101, Recession-Proof, Electing Recession, and Jobs for Robots. He is ranked the world's leading financial market futurist, and he is a columnist for Bloomberg Prophets. Jason Schenker is the President of Prestige Economics and the Chairman of The Futurist Institute.