E-Commerce Fulfillment: Fork in the Road
Between giants and startups, what’s left in the middle?
In the world of e-commerce fulfillment, we have experienced a golden age for logistics providers. For two decades, the market has grown at a rate of better than 20 percent, fueled by the explosion of e-commerce providers like Amazon. A rising tide lifted all boats, and thousands of e-commerce fulfillment companies benefited from the broad range of successful e-tailers.
However, 2019 was a turning point. This golden age is about to change. On the one hand, new disruptors like ShipBob are using technology to provide lower-cost e-commerce fulfillment solutions. On the other hand, large consolidators like Radial Commerce are deploying capital to acquire competitors and pursue global scale.
When e-commerce back-end solution provider ShipBob raised $63m (including $40m in September 2018), it marked a new challenge. And when Belgian national post powerhouse bpost acquired the 24-fulfillment center Radial for $820m in late 2017, it reflected a massive infusion of global capital into the sector.
Meanwhile, customers continue to expect faster response times. First, Amazon disrupted the status quo with Amazon Prime’s two-day shipping. Target countered with acquisitions of Grand Junction and Shipt, seeking to beat Amazon’s offering. Then Amazon upped the ante with Amazon Prime Now, boasting two-hour delivery. Customer demands will only accelerate going forward.
As a result, mid-sized e-commerce fulfillment companies are going to face a squeeze play. Winners will need to adapt by either (a) innovating in ways that make them easier to use, or (b) slashing cost and boosting locations to provide high-scale solutions. E-commerce fulfillment companies that fail to adapt will find themselves facing extinction.
What should your company do to be one of the winners? Let’s look at the market, the trends, and the decisions facing players in the e-commerce fulfillment space.
E-commerce fulfillment companies are third-party vendors that fulfill orders for companies such as traditional e-commerce companies, online sellers via marketplaces, or even brick-and-mortar stores that do not possess…