The logistics field is changing fast and furious, and eCommerce fulfillment is leading the way. At Amware, we try to keep an eye out for interesting facts that provide a big picture view of what’s happening across the industry. Here’s some of what we’ve come across lately in our reading – with a little added commentary.
$5 billion: Current dollar value of the eCommerce logistics industry’s fastest-growing segment – the same-day delivery market[i]
Our take: This isn’t a huge surprise. However, it is additional proof that eCommerce delivery times are becoming increasingly shorter and more competitive. By and large, consumers still prioritize delivery cost over service, but when they need something same-day or next-day, they like to have that expedited delivery option, and are willing to pay for it.
$56.6 million: Square footage that was added to the U.S. distribution market in the fourth quarter of 2018 (7 million square feet less than the actual new capacity that was needed during the same time period)[ii]
Our take: Although DC capacity is increasing, it continues to lag behind DC demand, particularly for eCommerce fulfillment center space. If you are looking to expand, partnering with a third party logistics provider (3PL) with an existing national fulfillment network could be a good strategic play.
Our take: As time goes by, you may discover that it’s harder to procure the reliable and cost-effective, over-the-road transportation that typically gets goods to your fulfillment centers, which could pave the way to higher prices and possible delivery disruptions. Now’s the time to work hard to ensure your company is a shipper of choice – or to align with a 3PL that has well-established carrier relationships.
63%: Percent of shippers who said they’re increasing their use of outsourced logistics services this year[iv]
Our take: Increased business is one of the best indicators of customer/client satisfaction. So, if you’re looking for tangible evidence that companies have found working with 3PLs to be helpful for their eCommerce logistics, this is it. And should you need another one, we’ll throw in this bonus from the same study: 91% of shippers report that their 3PL relationships have been successful.
50%: Percent of the U.S. logistics transport spend that’s currently being managed by 3PLs (a slight decline from the 53% reported in 2017)[v]
Our take: Just in case you thought we were only sharing “good” stats with you, we thought we’d toss this in to show we’re keeping it real. In related news, 34% of the U.S. warehouse spend is currently being managed by 3PLs, which is a 6% drop from 2017.
42-44%: Percent of companies that currently use 3PLs to perform value-added services such as labeling and tagging, packaging, or kitting/pre-assembly[vi]
Our take: Today’s 3PLs are not your father’s warehousing companies. Etailers, direct sellers and subscription companies are leaning on their fulfillment partners for pretty complex kitting and packaging services. It’s much more cost-efficient to perform these customization services in the warehouse, just prior to shipment.
20%: Percent of the average eCommerce logistics shipper’s budget that is spent on inbound transportation [vii]
Our take: While this cost is considerably smaller than outbound/parcel transportation, it’s still statistically significant. So, should you feel like you’ve already managed to cut all possible transportation costs (like your parcel spend) you might want to consider putting a little more cost-cutting emphasis on the inbound side.
15%: Percent of companies that are considering offering Sunday delivery
Our take: Consumers love having a wide variety of delivery options, even if they don’t choose to take advantage of them. As Etailers strive to differentiate themselves from competitors, don’t be surprised if more companies gravitate toward alternatives like these.
13: Number of primary U.S. markets that currently have an acute shortage of warehouse space (including Atlanta, New Jersey, Chicago, Dallas and Ft. Worth)[viii]
Our take: Remember that warehousing capacity issue we referenced earlier? It’s even more of an issue in some of the country’s most popular eCommerce distribution markets. Keep this in mind as you’re searching for warehouse space because it may require more lead time and money to establish a footprint in these markets. (P.S.: You can always contact Amware, because we may have immediately available space in many of these markets.)
The eCommerce logistics market is changing fast. Hope this “by the numbers” review was helpful in keeping pace. Sign up to our blog to stay in the know.
[i] Cresting The Hill: CSCMP’s 2019 State Of Logistics Report
[ii] CBRE Industrial & Logistics Report; AT Kearney Analysts; Cresting The Hill: CSCMP’s 2019 State Of Logistics Report
[iii] Bob Costello, chief economist at the American Trucking Association
[iv] 2019 Third-Party Logistics Study: The State of Logistics Outsourcing
[v] 2019 Third-Party Logistics Study: The State of Logistics Outsourcing
[vi] 2019 Third-Party Logistics Study: The State of Logistics Outsourcing
[vii] E-Commerce Logistics in The United States: Armstrong & Associates
[viii] Cresting the Hill: CSCMP’s 2019 State Of Logistics Report