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Retail Logistics Market Overview
“The Global Retail Logistics Market is expected to grow rapidly at a 5.26% CAGR consequently, it will grow from its existing size of from $270.12 Billion in 2023 to $701.25 Billion by 2030.”
What is Retail Logistics?
Simply put, the term "retail logistics" encompasses all the strategies, functions and processes required to transport merchandise to Point A (the source of supply) to Point B (the end consumer). The logistics of retail can be classified into two parts, or groups: inbound logistics and outbound logistics.
Inbound logistics refers to the process that retailers use to source materials or goods that are finished and transport the products from the source to an internal point of entry such as the fulfillment center, warehouse manufacturing facility, or a retail store so that they can include them in their inventory.
Outbound logistics, in contrast is the way in that retailers transfer product from their internal locations that is, for example, such as a fulfillment center, warehouse manufacturing facility or retail store to the final customer. In the sense that outbound logistics takes over where inbound logistics ends.
If taken as a whole the logistics of retail may appear quite straightforward, however, each element of the process requires careful thought and careful planning.
For instance, when it comes to the storage of goods for retail, it's not enough for businesses to randomly put their goods on shelves. Retail logistics is an extremely fast-paced procedure and warehouses are generally very busy, which is why warehouses need to be set up in a manner that helps to facilitate logical inventory flow. In the same way the stock-keeping units (SKUs) need to be strategically placed in order to improve efficiency and efficiency, by having common items easily accessible to warehouse employees.
Each of these components must be evaluated regularly to determine their effectiveness. This is the reason why a lot of retailers opt to invest in the warehouse management program (WMS) or work with an outside logistics (3PL) service that has WMS capabilities to get real-time insight into inventory management and streamline various warehouse workflows.
As you will see, there's a lot of complexity involved in warehouses -- and that's only one aspect of logistics for retail. Additionally, it's the fact that most businesses usually operate in several channels, not only in the way they market their goods and services, but also the way they manage logistics.
For instance, a retailer could manufacture certain items and, consequently, purchase the raw materials needed to make them from a single supplier, and then finish products from a different. The company may also use an array of different retail fulfillment methods, opting to process certain orders within the retail outlet of their choice and other orders through an drop-shipper or 3PL partner. Certain items must be shipped to brick and mortar retail stores for the final sales, whereas others are shipped directly to the buyerThe list is endless.
Types Of Retail Logistics:
Logistics is divided into six distinct categories, and they are described in the following paragraphs:
Inbound Logistics:
Inbound logistics is the process of implementing companies' internal exercises and processes for completing the production of a specific product. It encompasses all essential tasks within an organization that is truly upstream.
Outbound Logistics:
This type of logistics deal with all the steps needed to deliver the finished product to the final consumer. It also includes downstream operations which comprise the final component of the supply chain for retail.
Third-Party Logistics:
Third party logistics encompasses all the processes within a supply chain which organize, implement and monitor the flow of retail goods to satisfy customer requirements. This means that an outside party manages the logistics functions.
Fourth Party Logistics:
This kind of logistics is essentially an improvement over third-party logistics. It involves coordinating infrastructure, resources, and new technologies as well as managing 3PLs to ensure reliable supply chain management solutions to diverse retail companies.
Distribution Logistics:
The retail logistics is comprised of all processes involved in transporting products and information from the production end to the consumer. It can be described as an intermediary between the production and the market.
Reverse Logistics:
Reverse Logistics is the process where an item that is damaged is sent to the producer in order to have it repaired or overhauled.
Demand Outlook
The expansion will likely be driven by the development of new last-mile delivery techniques, like implementation of Internet of Things (IoT) as well as the application of data analytics and urban warehousing among others, within the chain of supply. A supply chain that is connected to IoT connects many technical devices using sensors that allow the collection of real-time data important aspects like temperature and filing rate.
Supply chain solutions that are based on IoT give merchants incredible inventory control and accuracy. IoT sensors embedded into storage facilities and warehouses continuously monitor inventory levels, and start replenishment orders when certain requirements are met. This strategy based on data helps reduce overstocks and stockouts, while maximizing levels of inventory, and also lowering the cost of carrying.
Customers also gain from technological advancements like intelligent distribution robots as well as automated sorting systems that bring in a new age of intelligent logistics. The major companies can understand the real needs of customers more quickly and with greater accuracy due to the vast majority of the links in the latest retail format, which have been digitalized and can be accessed in real-time. This is aided by the use of cutting-edge technology like machines learning (ML) and big data as well as artificial intelligence (AI).
Furthermore, AI and ML algorithms can help improve logistics planning in many ways, such as the planning of routes as well as fleet management and delivery schedules. AI-powered systems can design optimal routes for delivery, taking into account factors like the traffic conditions, delivery times windows, and the capacity of vehicles which reduces transportation costs while improving operational efficiency.
Advanced AI algorithms can optimize resource allocation including labor, warehouses, as well as transportation, in order to reduce costs and provide the best service to consumers at a reasonable cost.
To modernize existing retail models, retailers as well as traditional distribution channels should concentrate on B2C e-commerce and self-service vending machines. B2B wholesale distribution and O2O.
Furthermore, factors like increasing globalization, a rise in international retailing, as well as an increase in economic growth due to the growing tax revenue from goods that are imported and exported are likely to aid the growth of the industry in the future.
The rapid growth of e-commerce retail has created a variety of opportunities for aspiring and well-known companies in the market. However, the retail industry has been confronting a variety of operational and financial problems in recent years.
Return shipping is becoming a increasingly common component of logistics processes, causing operational challenges and the possibility to reduce logistical expenses. Additionally, a poor infrastructure could slow the growth of markets because it makes market players reluctant to invest and grow.
Key Takeaway:
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Market Dynamics [Drivers, Trends, Challenges, Opportunities]
Market Segment Analysis
Solution Insights
Based on the solution that supply chain provides, the sector racked up the biggest market share that was 35% 2022 and is expected to maintain its dominant position in the next forecast period. A significant increase in the market share is mostly due to its advantages such as timely delivery, a better multichannel operations, personalizing ordering and kitting process and efficiently managing return of customers.
Supply chain also facilitates direct-to store and direct-to customer shipping, which dramatically reduces the duration of delivery and increases the efficiency of warehouses as in maximizing the inventory. Supply chain is also growing at a rapid rate of around 13% because of the use of cloud-based and data analytics solutions in management of the supply chain.
In contrast, the reverse logistics and liquidation has a significant growth rate over the forecast timeframe due to the phenomenal growth of eCommerce platforms as well as the growing numbers of online shoppers all over the world. Consumers today prefer an easy exchange and return process for the purchase of any item. This is why retailers should facilitate the return of online purchases easy and simple for their customers.
Mode of Transportation Insights
Roadways segment was responsible for the majority of the revenue of 52% in 2022. The forecast predicts similar growth over the next few years. The rapid growth of this segment is mostly due to growing demand for road transport to long distances especially within the domestic regions.
Furthermore, a quick and quick method for the delivery and return of goods is another important factor driving the expansion of the segment. Alongside, various government initiatives to improve the health of international and national highways. Additionally the government is also focused on monitoring the condition of highways making use of cognitive analytics and the Internet of Things (IoT). All of these factors contribute to the expansion of the segment.
Additionally, the segment of roads is also expected to grow the fastest in the coming years due to the increasing connectivity of roads, particularly in developing countries. This drives the demand for road transport versus other modes of transport.
Furthermore, tier 1 as well as two cities are connected by road networks which further increases the demand for road transport for retailers as it is an efficient method of delivery and pick up products.
Competitive Landscape of the Retail Logistics Market
Recent Developments in Retail Logistics Market
Oct 30, 2023: Bankrupt Mitchell Gold and Ryder reach deal on undelivered products
June 2022- KWE Opens U.S. Sales Office in Salt Lake County, Utah.
June 2022- A.P. Moller – Maersk to acquire ResQ to strengthen Maersk Training’s offerings within safety training and emergency preparedness.
May 2022- Maersk launches a revamped Middle Corridor rail service.
May 2022- InterGlobe Enterprises and UPS Launch MOVIN - A New Logistics Brand Built for India.
In April 2021, DHL International, a leading international cargo carrier announced to expand its route in Asia Pacific to the US and Europe in order to meet the rising demand for freight services. Further, in February 2016, DHL International announced the expansion of partnership agreement with JD.com, Inc., a leading direct sales company based in China for the co-operation in cross-border supply chain initiatives.
In December 2020, FedEx signed an agreement to acquire ShopRunner, an e-commerce platform, which enables FedEx to use ShopRunner’s e-commerce capabilities leading to its improved e-commerce portfolio and increase customer base.
In April 2020, FedEx partnered with BigCommerce Pty. Ltd., aiming to help small and medium businesses run on e-commerce and deliver and also offers customers affordable and easy access to FedEx shipping services.
Regional Insights
Geographically in terms of geography, it is the Asia Pacific is the front-runner in the global retail logistics market, with an estimated revenue share of 26% in 2022. The market is predicted to keep its position in the coming years. This is due in large part to the rapid development of the logistics infrastructure, particularly in the developing nations like China, India, South Korea, Australia, Singapore, ASEAN nations, and numerous others.
In the case of Singapore, for instance the framework agreement was reached with the Cambodian Ministry of Public Works and Transport (MPWT) and Singapore based YCH Group Pte Ltd in the hope of developing Phnom Penh Logistics Complex Project.
Furthermore, the fact that a lot of companies are planning to relocate their manufacturing facilities to areas in Asia Pacific region is the primary reason behind the growth of the market for retail logistics. For instance in the month of July 2021, Taiwan Semiconductor Manufacturing Company announced it would open their first chip production facility in Japan and begin operations before the end of 2023.
Also, in November of 2018, Alltech, leading supplier of animal food products, expanded their manufacturing facilities in India. Similar to this, other businesses from different markets are extending their manufacturing facilities in the region due to the low cost of labor and other favorable conditions to lower the cost of manufacturing overall. The manufacturing activities of the manufacturing companies significantly increase the development of logistics for retail within the region.
But, North America and Europe are also major revenue earners in the world retail logistics market due to the rapid growth of the food and beverages business for delivery online. In the year 2019, it was reported that the UK marketplace for food deliveries was responsible for US$10 billion which was an increase of 39% in the last three years. Similar to that, the US internet-based food delivery was valued by US$26.5 billion in the year 2020. These figures show the major contribution to the development of logistics in retail across both the North America and Europe markets.
Segments Covered in the Retail Logistics Market
Retail Logistics Market By Type
Retail Logistics Market By Solution Type
Retail Logistics Market By Mode of Transport Type
Retail Logistics Market By Region
Frequently Asked Questions:
How much will be the projected market size of retail logistics market report until 2032?
Global Retail Logistics Market is expected to grow rapidly at a 5.26% CAGR consequently, it will grow from its existing size of from $270.12 Billion in 2023 to $701.25 Billion by 2030.
What is the Asia Pacific retail logistics market worth?
In terms of geography, the Asia Pacific is the front-runner in the global retail logistics market holding a revenue share of approximately 28% in the year 2023 and anticipated to maintain its dominance in the forthcoming years.
In 2023, which product type segment leads largest revenue share in retail logistics market?
By type, the conventional retail logistics segment leads the global market with a revenue share of around 59% in the year 2022 and anticipated to maintain the same trend over the analysis period.
In 2023, how much was the revenue share of roadways segment in the retail logistics market?
Roadways segment accounted for the major share of revenue of approximately 52% in the year 2022 and predicted to forecast the same trend over the upcoming years.
Who are the key players in the retail logistics market?
Some of the key players in the global retail logistics market are A.P. Moller – Maersk, APL Logistics Ltd., DSV, C.H. Robinson Worldwide Inc., DHL International GmbH, Kuehne + Nagel International, FedEx, Nippon Express, United Parcel Service, Schneider, and XPO Logistics Inc.among others.
How much revenue share was captured by supply chain solution segment in 2023?
Based on solution, supply chain captured the largest market revenue share of 37% in the year 2023 and anticipated to continue its dominance during the future outlook period.