E-commerce Fulfillment Services Market Size, Share & Trends Analysis Report By Service Type (Warehousing & Storage, Bundling, Shipping), By Application (Clothing & Footwear, Home & Kitchen), And Segment Forecasts, 2021 - 2028

Report Overview

The global e-commerce fulfillment services market size was valued at USD 77.57 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 10% from 2021 to 2028. The proliferation of e-commerce and a resultant rise in the number of online buyers, especially in the emerging economies, is anticipated to fuel market growth. Fulfillment service centers enable e-commerce merchants to outsource services including bundling, warehousing, shipping, and other value-added services, such as return management and urgent parcel service. A fulfillment center is ideal for merchants that do not have robust warehousing capabilities to manage inventory directly and do not want to invest additional efforts in shipping. 

However, e-commerce fulfillment services can be managed in-house by e-commerce merchants. Several consumers prefer ordering products online over in-store shopping due to several benefits offered in terms of convenience, cost, variety of choices, and lead time. E-commerce businesses significantly depend upon the warehousing and shipping capabilities to get products transported from manufacturing units/retailers to end-users in a shorter lead time. Traditionally, warehousing was highly labor-intensive; however, in recent years, merchants have begun automating operations within the aisles of modern warehouses to minimize human intervention and thereby improve fulfillment productivity and reduce order delivery time. For instance, Amazon.com, Inc. uses robots in its fulfillment centers to assist associates in performing operations and drive faster shipping times.

With the majority of e-commerce sales coming from the urban area, and consumers increasingly demanding product delivery in the shortest possible turnaround time, the location of a fulfillment center is of strategic importance to e-commerce companies. Having centers near major cities that not only house products, but also perform other fulfillment services like sorting, bundling, labeling, and shipping helps e-commerce companies to deliver products in a shorter turnaround time and win customer’s confidence. Thus, fulfillment centers remain a preferred choice for e-commerce companies that require efficient partners for their fulfillment operations.

The ongoing COVID-19 pandemic has taken a severe toll on businesses across every sector, curbing profits and drying up cash flows and financial reserves. E-commerce companies and fulfillment centers are no exception to this as the industry suffered a minor setback during the pandemic due to supply chain disruptions and labor shortages. Thereafter, with consumers shunning the in-store purchases and preferring to shop online, the surge in online orders did put an unprecedented strain on the logistics and transportation services of e-commerce companies. The shippers are still facing uncertainty in the movement of goods owing to the mandated lockdown in certain countries. On the contrary, the pandemic opened a new long-term growth avenue for e-commerce and service fulfillment companies. To better fulfill the growing number of online sale orders, companies prefer outsourcing fulfillment services to providers that are focusing on improving their internal operational efficiency and a strong distribution network.

Service Type Insights

The shipping segment led the market in 2020 with a revenue share of more than 40%. The trade liberalization policies and cross-border shipment agreements have resulted in increased trade and shipping activities. With the proliferation of the e-commerce industry, e-commerce companies prefer to outsource shipping services to third-party fulfillment service providers and concentrate on other key business operations. Thus, shipping services account for the largest revenue share in the market.

The warehouse and storage segment also held a considerable revenue share in 2020. The introduction and adoption of automated robots and Augmented Reality (AR) technology in warehouses is significantly improving operational efficiency and consequently contributing to segment growth as e-commerce companies worldwide continue to outsource these services in a bid to reduce the delivery time.

Application Insights

The clothing and footwear segment held the largest revenue share of over 26% in 2020. Among all the product categories available on e-commerce platforms, sales from the clothing and footwear segment were the highest in 2020. Consumer electronics is expected to emerge as the fastest-growing segment registering a CAGR of over 12% from 2021 to 2028. The growth is attributed to the burgeoning demand for consumer electronics coupled with the need for careful handling of fragile electronics products. Consumer electronics, such as mobile phones, tablets, and televisions, often need special care while packaging.

Since the majority of consumer electronics are extremely fragile, they are required to be packed carefully to reduce the risk of damage. In addition, the shipping boxes/cartons should also be appropriately sealed to prevent moisture from getting in and defecting the product. E-commerce fulfillment centers not only manage the specific requirements of packaging but also offer bundling and assembly services. Several electronic products come with accessories, such as controllers, extra cables, headphones, and speakers, that consumers wish to order together as a kit. The fulfillment center procures separate products and bundles them for selling as a complete set. To focus on their core business operations, e-commerce companies outsource their fulfillment services to third-party service providers.

Regional Insights

Asia Pacific dominated the global market and accounted for over 25% of the overall revenue share in 2020. The region is anticipated to continue its dominance over the forecast period on account of the increasing internet penetration and growth prospect offered by relatively untapped markets in the region (rural areas and 2-tier cities). In addition, countries, such as China, Japan, and South Korea, are among the top 10 exporters of merchandise and account for a large portion of global e-commerce sales. Thus, the strong growth prospect of the e-commerce industry in the region is the major factor supporting regional market growth.

North America is also projected to exhibit a strong CAGR from 2021 to 2028. The growth is characterized primarily by the presence of key market participants in the region, such as Red Stag Fulfillment, Shipfusion Inc., and Amazon.com, Inc. High adoption of automation technologies for efficient management of fulfillment services has won the trust of e-commerce companies in the region, leading to market growth. In addition, after China, the U.S. has emerged as the second-largest market for e-commerce globally, driving the demand for fulfillment services.

Key Companies & Market Share Insights

Service portfolio extension remains the premier strategy adopted by the market players. For instance, in February 2019, United Parcel Service of America, Inc. launched a new eFulfillment platform. This new platform connects the company’s fulfillment service centers to small- and medium-sized businesses on 21 online marketplaces, including Amazon.com, Inc.; eBay Inc.; and Etsy, Inc. The platform enables businesses to handle their orders and inventory easily across several marketplaces from a single location. Consumers worldwide are becoming more demanding towards service aspects, especially regarding the lead time and shipping cost. To cater to the growing consumer expectations, providers are increasingly focusing on shortening the delivery cycle along with providing services, such as click-and-collect, to avoid delivery charges and ensure easy return and exchange. Some prominent players in the global e-commerce fulfillment services market include:

• Amazon.com, Inc.

• Ingram Micro, Inc.

• Rakuten Super Logistics

• ShipBob, Inc.

• Shipfusion, Inc.

• Sprocket Express

• FedEx

• United Parcel Service of America, Inc.

E-commerce Fulfillment Services Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For the purpose of this study, Grand View Research has segmented the global e-commerce fulfillment services market report on the basis of service type, application, and region:

• Service Type Outlook (Revenue, USD Million, 2017 - 2028)

  • Warehousing and Storage Fulfillment Services

  • Bundling Fulfillment Services

  • Shipping Fulfillment Services

  • Others

• Application Outlook (Revenue, USD Million, 2017 - 2028)

  • Automotive

  • Beauty & Personal Care

  • Books & Stationery

  • Consumer Electronics

  • Healthcare

  • Clothing & Footwear

  • Home & Kitchen Application

  • Sports & Leisure

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Russia

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa