Los Angeles, CA (PRWEB) March 23, 2014
Order fulfillment services have a buyer power score of 3.5 out of 5. This score reflects a buyer's ability to negotiate lower prices due, in part, to the large number of suppliers; however, recent price trends have slightly weakened buyer power.
In the three years to 2013, the rise in prices for order fulfillment services is largely the result of a rise in demand stemming from the growth in consumer spending and e-commerce sales, says IBISWorld analyst Jordan Weinstein. Many different businesses in a variety of sectors use order fulfillment services. Rising consumer spending has helped increase demand for fast-moving consumer goods and products that are sold quickly at a relatively low cost. These products are often outsourced to order fulfillment providers in order to streamline the warehousing, packaging and shipping process, thus boosting demand for service providers. In addition, e-commerce sales have also grown during the past decade, and the internet will increasingly be used to sell products. This rise in e-commerce will further increase demand for order fulfillment services because many e-retailers outsource this process, ultimately driving prices up. During the same period, suppliers have also seen a rise in input costs, including machinery used in warehouses, such as forklifts, and packing tools, which has led to increased pricing for order fulfillment services.
Fortunately for buyers, increased consumer spending and e-commerce sales combined with slower growth of input costs will not lead to substantial price growth for order fulfillment services in the coming years, continues Weinstein. Suppliers face pricing pressure due to heavy competition, and suppliers that drastically raise prices due to increased demand risk losing business to providers offering the same services at a lower cost.
Price aside, low market share concentration and the high level of competition among order fulfillment service providers aid buyer power. Competition is magnified due to the large number of service providers. In addition, the standardized nature of order fulfillment services makes a wide variety of suppliers capable of satisfying specific buyer requirements. Thus, these conditions are favorable for buyers. For more information, visit IBISWorld’s Order Fulfillment Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of order fulfillment services. Order fulfillment is when a business outsources the process of product warehousing and distribution, from point of sales inquiry to the delivery of products to customers. These services may include warehousing, mailing orders, product repair and repackaging and list management, log keeping and order summarizing. This report will not cover market research mail surveys, branding of products or sales promotion services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.