Online retailers to continue outsourcing logistics functions over the next five years

e-retail

Ti recently ran a survey of 71 3PL professionals to gain a better understanding of the current state of the logistics market. Of those which dealt with e-commerce volumes, most respondents were confident that online retailers will outsource more logistics functions over the next five years. This trend is likely to be more prevalent amongst multi/omnichannel retailers rather than pure plays (online only).

How do you expect online retailers’ outsourcing habits to change over the next five years?

These results echo those of a survey run by Ti in 2018, which also found that a clear majority of respondents believed that online retailers will outsource more functions over the next five years, mostly among multi/omnichannel retailers. The market has clearly been undergoing a fundamental change for some years, and particularly in a post-covid era which has seen immense pressure on supply chains, outsourcing logistics is now seen as a way to differentiate operations and build resilience. 

Given the complexity of multi/omnichannel supply chains, we may therefore see multi/omnichannel retailers continue to devote more resources to optimising their logistics operations.  Particularly as the key to a seamless multi/omnichannel experience is new technologies, in which traditional WMS and inventory systems are replaced by platform IT solutions, as well as the more pressing need for automation, an expensive investment that not all multi/omnichannel retailers are willing or able to commit to. Furthermore, labour and warehouse shortages do not seem to be abating anytime soon. Outsourcing to a 3PL which offers both scale and expertise will therefore be an increasingly attractive option to meet consumer demands without committing large amounts of resources and capital expenditure on updating in-house supply chains, particularly in the face of rising costs. 

Online only retailers on the other hand may be better positioned to undertake logistics operations themselves according to respondents. High profile success stories of internally developed e-commerce supply chains may have influenced participant answers (such as Amazon and Walmart). In both cases however it is likely that size and scope will be important factors in driving outsource rates.

Looking forward, a majority of respondents believe that online retailers’ e-commerce logistics costs as a % of their sales will increase over the next five years.

Ti’s State of the Market survey results also revealed insights relating to profit margin pressure and its causes, current 3PL market challenges as well as respondents planned future investment areas. Full survey results are available on GSCi – Ti’s online data platform.

Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry. 

Visit GSCI subscription to sign up today or contact Michael Clover for a free demonstration: [email protected] | +44 (0) 1666 519907 

 

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