Minimum Wage Hikes Will Raise E-Commerce Shipping Costs

Minimum Wage Hikes Will Raise E-Commerce Shipping Costs

By Kevin
Unlike many businesses, distribution centers can’t just move to areas with the cheapest labor.

A report released Friday by the real estate services firm CBRE says that the rising wave of minimum-wage increases at the city and state levels will have a pronounced effect on the warehouses that fulfill e-commerce orders from online sellers like Amazon. With their mostly hands-on picking and pulling methods, those facilities often have large staffs, and CBRE says each $1 increase in average hourly wages would add $1 million in costs to a warehouse with a staff of at least 500.

Get Data Sheet, Fortune’s technology newsletter.

According to the National Employment Law Project, 14 cities and states approved a $15 minimum wage in 2015, some limited to particular categories of workers, and some, including those in Los Angeles and San Francisco, covering all workers. As the Wall Street Journal points out, those rising labor costs are likely to be hard to escape, for a confluence of reasons.

While many industries have in the past relocated away from areas with higher wages, e-commerce customers’ rising demand for fast shipping makes it hard, if not impossible, to move distribution centers away from the cities they’re serving. In addition to slowing delivery, it would also add transportation costs, which make up a much larger share of supply chain costs than labor.

That means labor costs are likely to be passed on to customers. There are already signs of rising e-commerce shipping prices, such as in Amazon’s recent substantial hike in the minimum threshold for free shipping.

In the longer term, rising wages will also encourage shippers to push harder for automation in their distribution centers. Amazon already makes extensive use of Kiva robots in its centers. But it also still employs thousands of humans, in often physically demanding roles, who are generally paid between $10 and $14 an hour.

Comments

A rare glimpse of the stunning colors inside the United States’ forgotten textile mills
When most of our garments bear “Made in…” labels from distant countries, it’s easy to forget that the US still has its o...
Amazon’s Twitch is streaming 100 hours of Julia Child to set an example for gamers
Amazon’s Twitch is streaming 100 hours of Julia Child to set an example for gamers
2015 America Online Store Rankings Top 10
Currently seen in fierce competition in the US electricity supplier. USA 2015 "Black Friday", "Cyber Monday" online shop...
Music streaming has a nearly undetectable fraud problem
Right now, Spotify, Tidal, and Rhapsody are all battling multi-million-dollar lawsuits alleging copyright issues and imp...
How to choose the right fishing gear
At present the fishing gear market sales of fishing more pole to the type (also known as pull-type) of glass fiber reinf...
2014 & 2015 US "FAVORITE 50" e-commerce site ranking Top 10
According to the US "FAVORITE 50" Top 50 e-commerce site Rank: Top 10 sites, in addition to Amazon (B2C) and eBay (C2C),...
Google’s Android could be hit with an anti-trust charge by the EU
Google’s Android could be hit with an anti-trust charge by the EU
We’ll never learn more about space unless we build a starship
With a growing number of Earth-like exoplanets discovered in recent years, it is becoming increasingly frustrating that...
Top 5 Stores for Discount Shopping in New York City
Save lots while you shop at these great NYC shops

What About RatingGo.com.

The reputation of a business, is good or bad, is that your experience, or from you experience.

Find the right online store, Share shopping experience, Come to ratinggo.com