 New report from Armstrong & Associates provides deep overview of U.S. e-commerce logistics market |
Source |
American Shipper |
Post Date |
09/30/2020 |
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The report, entitled ¡°Rising Tide: The Rapid Growth of E-Commerce Logistics, 3PL Solutions, Last-Mile Delivery, and the Dominance of Amazon,¡± addresses United States e-commerce logistics growth, including e-commerce fulfillment and last-mile delivery, third-party logistics provider natives to Amazon, and Amazon¡¯s leading market position, among other related topics.
A new report recently issued by Milwaukee-based supply chain consultancy Armstrong & Associates pointed to how the ongoing upswing in e-commerce sales is driving gains in e-commerce logistics costs.
The report, entitled ¡°Rising Tide: The Rapid Growth of E-Commerce Logistics, 3PL Solutions, Last-Mile Delivery, and the Dominance of Amazon,¡± addresses United States e-commerce logistics growth, including e-commerce fulfillment and last-mile delivery, third-party logistics provider natives to Amazon, and Amazon¡¯s leading market position, among other related topics.
The release of the report is timely, in that second quarter adjusted retail e-commerce sales¡ªat $211.5 million¡ªsaw a 31.8% over the first quarter, with Armstrong noting that this gain was buoyed by more consumers shopping online over the course of the COVID-19 pandemic, and a 44.5% annual increase, based on data from the U.S. Department of Commerce. And the firm observed that e-commerce retail accounts for 16.1% of total U.S. retail sales, with this segment seeing a 14.6% compound annual growth rate (CAGR) from 2015-2019.
What¡¯s more, the report noted that the gains in e-commerce sales continue to push U.S. e-commerce logistics costs, with a 19.9% CAGR through the of this year and e-commerce logistics costs representing 9.9% of total U.S. retail costs.
When asked if it was reasonable to expect e-commerce logistics growth to remain intact current levels even after there is eventually a COVID-19 vaccine, Evan Armstrong, president of Armstrong & Associates said it is likely.
¡°The pandemic has forced e-commerce on to many consumers who have rarely or never shopped via the Internet previously and expanded the use of current digital shoppers,¡± he said in an interview. ¡°This new way of life has made consumers more comfor in making digital purchases, and we think this tr will continue. For 2020, we expect U.S. 3PL E-Commerce Revenues to expand 23% with or without a vaccine.¡±
And with e-commerce logistics costs now at 9.9% of total U.S. logistics costs, Armstrong identified myriad logistics cost drivers, including:
? the continued rapid expansion of e-commerce retail networks (both domestic and cross-border) to meet demand;
? increasingly complex last-mile delivery, which can account for 30%-40% of the total cost of transportation;
? a shift to B2C in the parcel segment (one package per delivery in B2C, on average, compared to three packages in B2B);
? a tight warehousing labor market as e-commerce fulfillment requires three times as many employees per square foot than a traditional 3PL or Retail warehouse, with wages and incentives to retain employees are increasing and also driving increased use of autonomous robots to support activities such as picking and replenishment; and
? reverse logistics as e-commerce merchandise is returned up to three times more frequently than products purchased in store
As for Amazon and its significant presence in e-commerce logistics, the report points out that Amazon now represents and estimated market share of 60% of the U.S. e-commerce 3PL segment, a figure that is expected to increase, according to Evan Armstrong.
¡°Sixty percent is our 2020 estimate, and we expect Amazon to continue its 3PL growth over the next 3-5 years eventually slowing relatively as major e-commerce 3PLs become more competitive and retail brands increasingly strive manage their own marketing and distribution channels outside of Amazo
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