In the three years to 2017, the price of cushioning supplies will continue to increase due to growing demand from downstream markets
Los Angeles, CA (PRWEB) December 16, 2014
Cushioning supplies have a buyer power score of 3.5 out of 5, indicating moderately favorable negotiating conditions for buyers. According to IBISWorld market research analyst, Jesse Chiang, "Buyers gain significant leverage from low specialization and low switching costs." These factors allow buyers to switch operators without significant risks in quality. Buyer power, however, is limited by the low level of viable substitutes, which forces buyers to make purchases in the cushioning supplies market.
Low specialization benefits buyer power by increasing the number of viable suppliers in the market. "The low specialization stems from the fact that manufacturing or distributing cushioning supplies does not require significant market knowledge or expertise," says Chiang. The wide availability of suppliers that can meet basic demand requirements benefits buyers because buyers can select suppliers primarily based upon price and level of service. Low switching costs further help buyers by empowering them to easily switch between vendors of cushioning supplies. This allows buyers to optimally leverage vendors with lower prices. Buyers can either force the existing supplier to lower prices or can simply switch to the vendor with the lowest prices. Major vendors in the market include 3M Company, Packaging Corporation of America and Sealed Air Corporation.
Buyer power is limited by the lack of available substitutes. While buyers can purchase protective packages with built-in cushioning, these products are costly and can only be used for products of a certain size. Buyers can also purchase shredded paper, but shredded paper lacks the durability of cushioning supplies and may not have the aesthetic needed to appeal to certain markets. The limited availability of substitutes hurts buyer power because buyers are forced to purchase within the cushioning supplies market unless they are willing to sacrifice functionality or increase costs. This factor particularly hurts buyer power because the price of cushioning supplies is expected to continuously increase in the three years to 2014. Buyers are advised to engage in contracts to lock in lower prices. For more information, visit IBISWorld’s Cushioning Supplies procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of packaging and cushioning materials. Suppliers provide packing peanuts, protective foam, bubble wrap and air-filled packing materials. The market consists of manufacturers, wholesalers and retailers. This report excludes molded fiber packaging, shredded paper, other mailing tubes and accessories.
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.