05/19/2025
Implications of the Expansion of E-Commerce on Urban Development
Canete Medina Consulting Group Inc. (Canete Medina) recently conducted a study on the impacts of the expansion of E-commerce to urban growth and development. The research team was led by Canete Medina, a transportation planning firm with expertise in supply chain management consulting, data analytics, and urban planning.
Recent years have seen rapid increases in online retail and app-based services and a decline in brick-and-mortar retail stores. As a result of the Covid-19 Pandemic, e-commerce accelerated, with more consumers (and workers) at home, ordering essentials, such as prepared and packaged foods and medicines, as well as all other consumer products. These changes have had a profound impact on transportation systems, land use patterns, labor demands, consumer access, and the vibrancy of neighborhoods.
From a macro-economic perspective, mobility and access challenges limit the economic opportunities for workers and make it more difficult to fill positions at e-commerce fulfillment centers. Increased remote working and the growth in e-commerce, as well as the decline in brick-and-mortar retail have strained transit ridership and impacted traditional sources of revenue for transportation and infrastructure improvements and ongoing operations expenses.
Figure 1: As e-commerce business models continue to evolve, different types of e-commerce facilities are emerging. Click on image to view larger. |
From a labor perspective, the challenges are numerous, with the increased reliance on direct-to-consumer deliveries, which elevated e-commerce personnel to “essential worker” status, while these workers experienced challenges associated with their positions. E-commerce workers are generally not well paid, are expected to work odd hours, cover extensive geographies, and delivery drivers must often rely on their own vehicles to make deliveries. As the locations for e-commerce become more dispersed and fulfillment center more decentralized, workers face increased challenges accessing these work locations. Availability of transit options are limited by the dispersed locations, odd working hours, and access to reliable transportation. Yet many consumers, especially those in rural or remote areas, have benefitted from expanded availability to a range of merchandise.
At the local land-use level, the increase of e-commerce and direct-to-consumer deliveries, along with related trends of remote work from home and diminished brick-and-mortar stores, have resulted in a muddling of traditionally separated land use patterns. Modern zoning and building codes are ill-equipped to deal with such new uses as “ghost kitchens” and “dark stores,” as well as home-based businesses. Neighborhoods and traditional businesses have suffered from the loss of vitality and connectedness due to increased retail closures and reduced worker attendance. Residential areas have become more congested due to increased commercial vehicles and activity. This has resulted in curbside management and congestion issues, increased daytime traffic (due to home-based workers), parking demands, and local fulfillment centers creating warehouse-like impacts in non-industrial areas.
The implications of increased e-commerce development, remote working, and direct-to-consumer deliveries are of profound importance to local, regional, and state transportation agencies. As e-commerce business models continue to evolve, different types of e-commerce facilities are emerging (see Figure 1). Current zoning regulations need to be updated in order to better regulate these new types of e-commerce facilities.
While transportation agencies collect substantial freight data, the lack of e-commerce-specific data precludes the development of tools and methodologies for evaluating the impacts of e-commerce. This is a much-needed area of study for the future.
E-commerce and direct-to-consumer deliveries provide many opportunities for workers, communities, and consumers. However, they also come with challenges. One of the major challenges is the lack of data specific to e-commerce activities. To improve the analysis of the impacts of e-commerce on urban growth and development, Illinois communities are encouraged to collect data on e-commerce facilities and activities in their neighborhoods. Creating a simple inventory of businesses engaged in e-commerce-related activities can be a start.
Authors: Isabel Cañete-Medina, AICP & Terry Rollman, Canete Medina Consulting Group Inc.
All image credits: Canete Medina Consulting Group Inc.
The APA-IL thanks Canete Medina Consulting Group Inc. for being a 2024-25 Tier II Sponsor and supporting Great Communities for All in Illinois!