Fulfillment Services Market Growing at a CAGR of 4-5 Percent, Says Beroe Inc
The global fulfillment services market is growing at a steady pace and is expected to reach a value of $55.6 billion by 2021 according to Beroe Inc., a procurement intelligence firm. Retail and e-commerce expansion in emerging markets along with growth in online buying is expected to strongly drive the fulfillment services market.
Regions such as Western Europe, North America, Australia, Japan, Hong Kong, and Singapore, have a high market maturity while APAC and parts of Latin America are expected to be the future growth driven markets. Currently, North America has the biggest market share with a value of $13.5–15.5 billion growing annually at 4–6 percent, while Australia has the fastest growing market with a market share of $1.5–1.9 billion growing annually at 8–10 percent. The Middle East and LATAM have low adoption due to the challenges in delivery because of low infrastructure and connectivity.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE: live.beroeinc.com
The numerous benefits of outsourcing fulfillment services to a dedicated supplier are driving the growth of the market. By outsourcing fulfillment services, buyers can focus on core business and avail of reduced shipping costs, best of technologies in the market, and allow buyers to standardize the level of services across various locations. However, the market faces challenges due to the risk of presenting an ineffective customer support system that may have a negative impact on the overall brand name.
The logistics industry is on an upswing due to increase in competition and higher customer expectation, adding to advanced technology. Furthermore, micro-fulfillment, a new method known as Airbnb for Logistics, has eradicated the pains of commuting to warehouses situated on the outskirts of the city, enabling speedy last-mile delivery by turning personal garages into company storage spaces. For instance, Walmart and AmazonPrime’s selling point of under two days’ delivery for free is a result of adopting the micro-fulfillment methodology.
The major cost components in the fulfillment services market are labor, accounting for 40-45 percent of costs, warehousing for 30-35 percent, and freight for 10-15 percent. The labor cost is one of the drivers that impact the average package cost, as labor costs contribute substantially to the overall cost and may increase the average package cost if the 3PL service provider does not use technology optimally. Complex specifications may require additional resources, time and integration among phases, which might increase the cost to the supplier.
Beroe is the world’s leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.