E-commerce Fulfillment Services Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

E-commerce Fulfillment Services Category Overview

The e-commerce fulfillment services category is expected to grow at a CAGR of 13.9% from 2023 to 2030. The increased number of online shoppers, particularly in emerging economies, and the proliferation of the e-commerce industry are driving the industry significantly. In addition, the rise in the number of e-commerce startups and the growth of small & medium-sized businesses across the globe has supported the market players in gaining momentum over the years. In 2022, the global market was dominated by the e-commerce shipping fulfillment service segment as the policies of trade liberalization and the agreements governing cross-border shipments have led to an expansion in trade and shipping.

Technological developments in fulfillment systems are enabling businesses to scale their operations efficiently. For instance, cloud-based solutions give businesses more flexibility when it comes to managing inventory, order processing, and fulfillment, enabling them to respond to shifting demand and seasonal peaks. In addition, the deployment of technological solutions such as AMRs (autonomous mobile robots) in warehouses makes fulfillment operations more efficient. Greater efficiencies can be achieved with system-directed workflows since the software that directs each AMR is able to "see" every order as well as the location of every other AMR device. These solutions can be scaled with ease as more AMRs can be added to mix on the requirement of higher capacity.

The category for e-commerce fulfillment services is moderately consolidated and less competitive, with top players holding over 60% of the market share. Establishing a fulfillment system requires significant investment initially, particularly in setting up a warehouse, getting equipments, deploying software, and other warehouse management technological solutions. In addition, logistics in fulfillment is typically complex and requires extensive knowledge and expertise that may not be possessed by all businesses. Therefore, the majority of e-commerce businesses delegate the task of fulfillment to third-party logistics companies rather than developing an in-house system as it may lead to a higher chance of mistakes including delivery delays, wrong orders, and inventory management issues.

Labor cost, warehousing, and transportation are the major key cost components of this category. Businesses in the category, generally use a value-based pricing model wherein the price of the fulfillment service depends upon inventory storage cost (by cubic foot or by pallet), pick and pack cost (by order or by unit), receiving cost (by shipment or by unit), kitting cost (by the kit or by hour) and customer support cost (either a flat rate or by hour). In addition, many fulfillment service providers can charge an extra fee for added services. For instance, if the time frame set forth in the initial contract with the merchant for warehouse storage is exceeded, suppliers charge back to its clients.

The global industry is dominated by the Asia-Pacific region as the highest utilizer of fulfillment services. The region is anticipated to maintain its dominance throughout the projected timeframe due to the rising penetration of the Internet and the potential opportunities provided by the largely unexplored markets in the region (rural areas and second-tier cities). In addition, nations in the region such as South Korea, Japan, and China represent a significant share of global online sales and are among the top exporters of goods. Thus, the region's e-commerce sector's promising growth prospects are a key driver of the expansion of the regional market. Furthermore, ensuring e-commerce integration (What level of compatibility the provider will have with the processes and business applications), assessing geographic distance of fulfillment center (delivery times are shortened because of the reduced delivery distance and closer location of the order fulfillment center to the final consumer), and negotiating prices & terms with suppliers are some of the best sourcing practices considered in this category.

E-Commerce Fulfillment Services Procurement Intelligence Report Scope