Unleashing Innovation in Order Fulfillment Procurement Intelligence

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The order fulfillment category is anticipated to grow at a CAGR of 10% from 2023 to 2030. The rising online retail sales each year have resulted in rapid growth in the e-commerce industry and an increasing number of businesses preferring to sell their products digitally. This, in turn, has influenced the logistics landscape globally, along with fulfillment providers focusing on providing the best services throughout the process right from picking an order to delivering it to the end consumer. Trends such as fulfillment center automation, personalization, sustainability, and Omni channel fulfillment are driving the growth of the category.

Automation in fulfillment centers and implementing robotics can increase accuracy and processing speed. These systems can take over repetitive tasks and reduce the likelihood of human error. Automation in processes such as picking, shipping, labelling, inventory management, back-office operations, and others can transform the entire fulfillment process. It can also increase customer satisfaction, drive sales, and cut back on labor costs.

To establish an order fulfillment process that is both environmentally sustainable and eco-friendly, service providers are integrating eco-conscious practices and cutting-edge technologies into their operations. This can mitigate environmental impact, enhance operational efficiency, and bolster reputation. For instance, renewable energy sources like hydropower, wind, or solar can be used to power warehouse and logistics operations by installing energy-efficient lighting, cooling and heating systems, and using smart devices. Fulfillment companies are also opting for reusing or donating surplus or damaged inventory instead of discarding it, thus promoting a more sustainable approach.

Online consumers also want retailers to ship their orders in a sustainable way and are ready to wait longer or pay extra for their orders. For instance, according to the Digital Commerce 360 report 2023, 76% of shoppers say they are ready to pay 5% extra for sustainable packaging. This has led to the growth in focus towards sustainable packaging.

Service providers are seeking solutions for last-mile delivery which is a crucial challenge for companies. To overcome this, service providers are coming up with solutions such as using micro-fulfillment centers in which the product is delivered more efficiently and faster through the stores located close to the end-consumer. Additionally, allowing consumers to retrieve packages at their own convenience through delivery lockers, and click-and-collect points.

Order your copy of theOrder Fulfillment Procurement Intelligence Report, 2023 - 2030, published by Grand View Research, to get more details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis

Labor, inventory storage costs, transportation, maintenance, conveyor and sortation equipment, and others are some of the cost components incurred in providing services. Other costs include utilities, insurance, and legal costs. The cost varies depending on the size and weight of the product, and the urgency and distance of delivering the product. Labor, inventory storage, and transportation costs are some of the major cost components. Due to the restricted space in warehouses, service providers charge for each square foot that the goods occupy. The larger the product, the more consumers will have to pay. The picking and packing fee can range from around USD 3 to USD 5 per item.

The category is fragmented in nature with the presence of numerous players providing services to businesses from small scale to large scale. Large companies such as Amazon and FedEx have a separate fulfillment division such as FBA by Amazon and FedEx fulfilment due to the significant growth in e-commerce. According to Walker Sands' 2023 report, as Amazon has gained a dominant position as the distributor of choice, effective order fulfillment has become increasingly crucial. Only 15% of the customers believed that most online retailers fulfil their delivery needs while 30% of consumers believe that Amazon already does. Specialized fulfillment companies are increasing their investments in creating an integrated platform that has multiple integrations such as, Shopify, EBay, Oracle NetSuite, or TikTok Shop. Suppliers are also shifting their focus from single-channel to omni-channel fulfillment which automates, simplifies, and speeds up fulfillment activities. Buyers of the services such as retailers and industrial distributors have moderate bargaining power as they can choose from multiple service providers.

Under sourcing intelligence, buyers also outsource their entire fulfillment service right from picking, packing, storing, labelling, and shipping of the product. Service providers are providing additional services to sustain in the market. For instance, through Amazon FBA service that stores, packs, and ships the order, also provides service to users by making their products appear in the prime listings and they would also be eligible for fast shipping. When seeking service providers, businesses assess suppliers based on the time taken by them to fulfill the order, services related to managing their inventory, how safely are the products handled, and providing end-to-end services. Buyers also seek transparency in the order status, and whether firms adhere to the standards and guidelines.

On the other hand, service providers have a complete in-house team that carries out complete activities from picking the products, managing them in the warehouse, labelling during orders, and shipping them to the customer. Buyers outsource the services to eliminate the burden of looking out for customers, packing the product in suitable boxes, managing complex operations, printing labels, and carrying it to customers. 

Browse through Grand View Research’s collection of procurement intelligence studies:

• Automotive Sensors Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

• Shipping Containers Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Order Fulfillment Procurement Intelligence Report Scope

• Order Fulfillment Category Growth Rate: CAGR of 10% from 2023 to 2030

• Pricing growth Outlook:  3% - 5% (annual)

• Pricing Models: Service-based pricing, competition-based pricing

• Supplier Selection Scope: Cost and pricing, past engagements, productivity, geographical presence

• Supplier selection criteria: Service provided, time taken to fulfill order, product handling, transparency in order status, customization option, client relationship, track record and reputation, regulatory compliance, and others

• Report Coverage: Revenue forecast, supplier ranking, supplier matrix, emerging technology, pricing models, cost structure, competitive landscape, growth factors, trends, engagement, and operating model

Key companies 

• Amazon

• ShipBob

• FedEx

• Shipwire

• Shiphero

• Deliverr

• ShipMonk

• eFulfillment Service

• Red Stag Fulfillment

• Fulfillment.com

Brief about Pipeline by Grand View Research:

A smart and effective supply chain is essential for growth in any organization. Pipeline division at Grand View Research provides detailed insights on every aspect of supply chain, which helps in efficient procurement decisions.

Our services include (not limited to):

• Market Intelligence involving – market size and forecast, growth factors, and driving trends

• Price and Cost Intelligence – pricing models adopted for the category, total cost of ownerships

• Supplier Intelligence – rich insight on supplier landscape, and identifies suppliers who are dominating, emerging, lounging, and specializing

• Sourcing / Procurement Intelligence – best practices followed in the industry, identifying standard KPIs and SLAs, peer analysis, negotiation strategies to be utilized with the suppliers, and best suited countries for sourcing to minimize supply chain disruptions

 
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