E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
A subsidiary of women’s apparel maker Aero signs a contract with TGW.
China’s retailers are seeking more advanced warehouse equipment to handle their rapidly growing volume of orders. That’s led a company that both makes women’s apparel and provides logistics services to e-retailers to turn to Austria for automated warehouse technology.
CNSS China Co. Ltd. has signed a contract worth 80 million yuan ($13 million) to obtain equipment for a new e-commerce warehouse from TGW Logistics Group of Austria. CNSS was founded in 2011 by apparel manufacturer Aero Technology (China) Co. Ltd. to fulfill orders for Aero and for other Chinese companies that sell online to consumers.
CNSS plans to build this year a 51,800-square-meter (557,575-square-foot) central warehouse in Danyang, a city 125 miles from Shanghai, and in the next several years to construct seven regional warehouses and 15 provincial distribution facilities.
In outdated warehouses, one worker picking orders may need to walk up to 40 kilometers each day, CNSS says, a system that becomes increasingly unwieldy as the volume of orders increases. To accelerate the processing time and reduce errors, CNSS decided to adopt a system from TGW that picks products automatically.
“CNSS bought automated picking stations, conveyor equipment and two Natrix sorters from TGW,” Julie Sun, managing director of TGW China, tells Internet Retailer. Natrix is a TGW brand of equipment that can directs packages of varying sizes to the proper conveyor belt for shipping. Sun says warehouse workers will use mobile terminals to get order information and follow lights to the items they need. Products will travel over seven kilometers of conveyors to 70 packing stations that will be staffed by 140 workers, Sun says.
CNSS aims for its center warehouse to process more than 20 million parcels daily and generate 200 million yuan ($32.7 million) in annual revenue for CNSS in 2014.
TGW, whose clients include such Western apparel brands as U.S.-based Gap Inc. and Spain’s Zara generated revenue of more than 455 million euros ($609 million) for its fiscal year that ended June 30, 2013, up 25% from the prior year. According to Sun, a year after entering the China market TGW China has signed more than 100 million yuan ($16.3 million) in contracts with five clients and projects top 500 million yuan ($81 million) in annual sales by 2017.
“The Chinese logistics market is expected to grow by at least 30% per year in the future,” Sun says. “To better serve the Chinese market, TGW has decided to build a manufacturing plant in the Shanghai area, which is its fourth plant in the world.”
Big Chinese e-commerce companies are also investing in developing logistics facilities. E-retailer Jingdong has announced plans to invest 5 billion yuan ($817 million) in five new warehouses this year. Alibaba Group, meanwhile, joined forces this year with several other e-retailers and delivery services to found Cainiao Internet Technology Ltd., which aims to provide logistics services for the e-commerce industry. Jingdong is No.3 in Internet Retailer’s Asia 500 rankings and Alibaba is No.1.