E-commerce Logistics Market No More a Playground of Behemoths as New Entrants Up the Ante

In 2015, the global e-commerce logistics market was the playground of Fedex Corporation and DHL International GmbH, who collectively held sway over 50% of the business worldwide, says Transparency Market Research (TMR) in a new analysis. The other two key players in this space are XPO Logistics, Inc. and United Parcel Service, Inc., albeit their reach isn’t as wide as the two logistics behemoths. However, companies are already upping the ante in anticipation of explosive growth of the e-commerce sector in India and China.

The e-commerce logistics space thus is extremely attractive currently and will witness the rise of many new companies, TMR says. While large companies are investing in drones and last-mile connectivity to keep ahead of the others, the smaller firms are focusing on value-added differentiating services such as route optimization and innovative parcel tracking. These trends will make the e-commerce logistics market a space bubbling with innovation, TMR forecasts. Other companies to watch out for in the e-commerce logistics business are Gati Limited and Clipper Logistics Plc

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Innovative Delivery Technologies will Attract Both Interest and Investments

The emergence of the contemporary B2C e-commerce model has forced companies to align and re-align their business models several times in the past years. Innovative delivery technologies are the key facilitator of this change. All eyes are on drone delivery, which will arguably be the biggest trend in the e-commerce logistics market in the coming years. Companies such as Amazon.com have already jumped into the fray with its Amazon Prime Air service that uses small drones to deliver packages in 30 minutes or less - about the same time that it takes to get a pizza delivered home. Drones, droids, and parcelcopters are here to stay, says TMR.

Moreover, the mushrooming of e-commerce startups in countries such as India, Brazil, Mexico, and Saudi Arabia will give the demand for e-commerce logistics a further boost. C2C e-commerce models are also projected to boost the market for e-commerce logistics.

Complications Associated with Reverse Logistics Stand in the Way of E-commerce Logistics Providers

In a space that’s as competitive as e-commerce logistics, companies are forced to offer value-adds such as free delivery of goods and reverse logistics. Although most companies have a minimum value order for goods ordered in order for customers to avail free delivery, there are loopholes in this arrangement. The most common one is customers ordering goods to reach the stipulated minimum order for a free delivery and then returning unwanted goods. This burdens the reverse logistics chain and cause a spike in the cost incurred by e-commerce logistics companies.

Similarly, in developing countries where infrastructure challenges abound, last-mile connectivity is limiting the business of e-commerce logistics providers. These factors are expected to restrain the growth of the global e-commerce logistics market through the report’s forecast period.

Growing Emphasis on Last-mile Connectivity Gives Transportation Segment a Boost

On the basis of service type, the report segments the global e-commerce logistics market into warehousing, transportation, and others. Of these, the transportation segment stood as the largest in 2015, accounting for a dominant 51.60 % of the market. This is thanks to the fact that the supply chain is pivoted on transportation. The growing emphasis on last-mile connectivity will give this segment a further boost.

The warehousing segment is further split into hubs/delivery centers, mega centers, and returns processing centers. Similarly, the transportation segment is divided into freight/rail, maritime, air/express delivery, and trucking/over road.

By operational area, the segments of the e-commerce logistics market are domestic and international. The largest revenue share is contributed by the domestic segment, finds TMR. This can be attributed to the emergence of large domestic e-commerce companies such as Flipkart (in India).

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The report studies the e-commerce logistics market in North America, Asia Pacific (APAC), Europe, Latin America, and the Middle East and Africa. North America will continue to remain the largest regional market for e-commerce logistics through the report’s forecast period – it stood at US$ 48.32 bn in 2015. Asia Pacific will show much promise with a CAGR of 22.4% from 2016 through 2024.

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This release was published on openPR.