E-commerce Fulfillment Services Market Size, Forecast [2031]

Report Description

The global e-commerce fulfillment services market size was USD 96.50 Billion in 2022 and is likely to reach USD 292.31 Billion by 2031, expanding at a CAGR of 13.1% during 2023–2031. Market growth is attributed to rising consumer preference for e-commerce platforms to purchase daily essentials.

The rapidly growing e-commerce market globally is a major factor driving the market. The global e-commerce industry is valued at around USD 3,090 Billion in 2023, expanding at a CAGR of 10.5%, to reach about USD 4,990 Billion by 2028. Growing consumer preference for online purchases over offline drives the need for e-commerce fulfillment services.

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E-commerce fulfillment services refer to the overall process of an order getting delivered to customers after they order. This includes from an order receiving and storing in inventory to packing and shipping the items to the customer’s location. These fulfillment services are important for a company offering e-commerce services to reduce delivery times. With the inventory stored in the warehouses, the time taken for delivery from the warehouse to reach customers is less than the item directly shipping from the seller’s location.

The COVID-19 pandemic boosted the global e-commerce fulfillment services market. During the pandemic, governments across the globe imposed strict lockdowns to curb the spread of the virus, which increased the time consumers spend on e-commerce platforms. This boosted the e-commerce industry. 

• For instance, In 2020, total e-commerce retail sales grew, 4.5 times in the UK, 3.3 times in the US, and 1.6 times in China.

E-Commerce Fulfillment Services Market Dynamics

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Drivers

Rising internet and smartphone penetration is driving the market. The e-commerce market has been growing rapidly over the past few years. The rapidly growing 5G internet penetration in developed and developing countries is one of the major factors for the increasing smartphone penetration. For instance, 

• According to recent data, the number of smartphone users in 2023 is around 6.9 Billion and the number is expected to increase during the forecast period.

Easy access to the internet leads to the increasing number of people using e-commerce services to purchase daily needs. The need for e-commerce fulfillment services is expected to increase in the coming years owing to the rising consumer preference for online shopping as it offers a wide variety of products, doorstep delivery, and premium discounts.

Restraints

Strict government regulations and norms regarding e-commerce sales hampers the global market. Some governments across the globe are imposing strict regulations on e-commerce fulfillment services to standardize and regulate the process involved in fulfilling customer orders. For instance,

• In October 2023, the Ministry of Trade, the Government of Indonesia published regulation no.31, new restrictions on the e-commerce operators and activities of foreign merchants. This includes, foreign and local e-commerce operators need to impose a minimum price of USD 100 (free on board (FOB)) per unit, for purchases of finished goods from offshore to Indonesia. Previously, there was no limit. These restrictions and norms can hinder the demand for e-commerce fulfillment services.

Opportunities

Rising entry of offline retail and FMCG companies ing into the e-commerce sector to increase their reach and gain more customers is expected to create new opportunities for the market. Larger enterprises and SMEs present in the retail industry are offering online delivery services through either a D2C brand or through their portal.

Increasing consumer preference for social media commerce to purchase products is projected to create lucrative opportunities for the market. Small FMCG companies are entering into the e-commerce market through social media companies such as Facebook and Instagram to sell their products and services online. For instance,

• According to the article published by Forbes in Feb 2023, more than half of 18- to 24-year-old social media users in the U.S. placed at least one online order via social media in 2021, and this number is expected to increase in the coming years. This is expected to increase the demand for e-commerce fulfillment services to decrease the supply chain management costs.

Scope of the E-Commerce Fulfillment Services Market Report

The market report includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

E-Commerce Fulfillment Services Market Segment Insights

Type Segment Analysis

Based on type, the e-commerce fulfillment services market is divided into shipping fulfillment services, warehousing and storage fulfillment services, bundling fulfillment services, and others. The shipping fulfillment services segment dominated the market in 2022. The cross-border shipment agreements and trade liberalization policies increased trade and shipping activities.

Key market players in the market are outsourcing shipping fulfillment services to third-party agencies as the e-commerce market is growing at a rapid pace. Furthermore, the need for shipping fulfillment services is expected to increase in the projection period as the B2B and B2C orders are rapidly increasing in the e-commerce market.

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Organization Size Segment Analysis

On the basis of organization size, the global market is segregated into large enterprises and small & medium enterprises. The large enterprises segment dominated the market in 2022 due to the wide usage of e-commerce fulfillment services by major e-commerce companies such as Amazon and ShipBob to fulfill customers’ deliveries.

The demand for these fulfillment services is rapidly increasing in large enterprises due to the higher-paying capabilities of companies and larger business volumes. Fulfillment services offer large enterprises benefits such as a reduction in shipping costs and lower investments in warehouse infrastructures as these enterprises deal in larger amounts.

The small & medium enterprises segment is projected to register a considerable CAGR during the forecast period as major SMEs are entering into the e-commerce sector to gain more customers. Offline SMEs are entering the e-commerce sector through social media commerce as most millennials and Gen-Z customers are inclined to purchase from social media platforms such as Instagram and Facebook.

With the increasing consumer preference for social media commerce to purchase products and daily needs, the demand for e-commerce fulfillment services is expected to grow at a significant rate in the coming years.

Sales Channel Segment Analysis

On the basis of sales channel, the e-commerce fulfillment services market is segmented into business-to-business, business-to-customer, and direct-to-consumer. The business-to-business segment dominated the market in 2022. The e-commerce fulfillment services are widely used for B2B sales as these include delivery of large bulk deliveries from one business to another business.

B2B fulfillment services help companies establish long-term relationships with their retailers who place annual orders. Moreover, B2B fulfillment helps other businesses stock up on products which helps them to resell to their customers through one or multiple channels.

The business-to-customer segment is expected to register a robust growth rate during the forecast period. This segment growth is attributed to the increasing usage of e-commerce fulfillment services to deliver orders that are shipped directly to customers. B2C fulfillment is more straightforward than B2B as the product quantity is subjected to a customer only.

B2C repeat purchases rely solely on a customer experience and there is no obligation for a customer to purchase from the same brand again. Moreover, in the case of B2C, there are fewer rules and regulations compared to B2B which helps companies offering B2C fulfillment services in delivering the order with ease.

Application Segment Analysis

Based on application, the global market is divided into automotive, beauty & personal care, books & stationery, consumer electronics, healthcare, clothing & footwear, home & kitchen applications, sports & leisure, and others. The clothing & footwear segment dominates the market owing to the increasing consumer preference for e-commerce platforms to purchase apparel.

• For instance, according to a published report in 2023, the fashion segment dominated the global e-commerce market with the highest revenue of USD 607 Billion in 2022 and is expected to reach around 999 Billion in 2030. 

Major fashion and footwear companies are entering into the e-commerce space to capture major market share and attract new customers by offering discounts and personalization. This is expected to create new opportunities for companies offering e-commerce fulfillment services to expand their business in new regions.

The consumer electronics segment is projected to register a considerable CAGR in the coming years due to increasing e-commerce purchases of consumer electronics such as smartphones, smart wearables, laptops, and televisions. The number of people purchasing online electronic products is increasing as e-commerce companies are offering attractive discounts and free installations of electronic products. For instance

• According to the published report in 2023, the consumer electronics segment registered the 2^nd most revenue in the global e-commerce market with a revenue of around USD 509 Million in 2022 and is expected to reach around USD 873 Million in 2028. This rapid growth is expected to increase the need for fulfilling services to deliver B2B and B2C orders.

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Regional Analysis

In terms of region, the global e-commerce fulfillment services market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is expected to dominate the market during the projection period owing to increasing demand for e-commerce fulfillment services in developing countries such as China and India. For instance,

• According to the International Trade Association, China leads global e-commerce sales with more than 50% of all the retail sales of e-commerce, the total online sales were over USD 3 Trillion in 2022. With the rising internet and smartphone penetration, the regional e-commerce market is expected to grow rapidly, creating new opportunities for the fulfillment services market.

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