Is this a golden age for third-party fulfillment companies? Or is it a slippery slope of hyper-competition against a new breed of mega players?
There’s no question of the benefits the incredible growth in ecommerce has produced for 3PLs. Whether it’s from a “basement bob” or a multi-national bricks and mortar retailer, ecommerce customers expect prompt delivery of their orders and 3PLs provide an inviting option to meet those expectations
But, like anything else that “works”, the boom in ecommerce is attracting an ever increasing number of competitors and many of them are some of the biggest retail players in the world.
With sluggish results from their traditional retail channels, a number of major retailers are choosing to use their extensive network of stores and distribution centers to help give them an edge in ecommerce, which continues to enjoy double-digit growth each year.
- In the U.S., Walmart recently announced that it will begin using its vast network of stores as distribution points for ecommerce products to help it compete more effectively against Amazon.
- In Canada, Ikea has plans for a nearly 400,000 sq. ft. distribution centre in Mississauga, Ontario. News of the new centre followed an announcement from the company that it would open a number of “pick-up-point-locations” in Eastern Canada. According to Ikea, the “huge growth in ecommerce” is at least partly responsible for both moves.
So the boom in ecommerce is a good news/bad news scenario for 3rd-party fulfillment companies. First, it presents an unprecedented opportunity for growth. But, at the same time, while the Walmarts and Ikeas of the world may not compete directly, the competitive landscape for ecommerce distribution is heating up.
Sources:
https://www.biv.com/article/2015/5/ikea-reveals-plans-open-397000-square-foot-distrib/
http://in.reuters.com/article/2015/05/20/wal-mart-stores-amazon-com-idINKBN0O50AC20150520