Automation has been at the forefront of technology, and warehouses have turned the corner by incorporating modern sortation systems. Warehouses and distribution centers have transformed themselves from traditional sorting and picking to sortation systems that optimize these processes. The popularity of omnichannel solutions and the ever-growing E-commerce industry has made a significant impact on the requirement of advanced sortation systems.
Growing Popularity of Omnichannel Solution Drives the Market Growth
The emergence of e-commerce and shopping apps have drastically influenced the market dynamics in the world, as there is a large number of retailers shifting toward e-commerce business models. Changing customer shopping patterns have compelled the retailers to strategize and reconfigure businesses in order to meet the changing expectations of the customers.
Surging internet sales and the availability of several platforms to purchase, evaluate, pay, collect, and return purchases have driven companies to adopt an omnichannel approach. As per the statistics from the Think with Google 2019 Research Review, about 83% of the U.S. shoppers search online before visiting a store. Thus, the growing influence of social media, advertisements, and online videos have compelled retailers to go online.
The online share of total retail sales accounted for USD 602 million in 2019. Additionally, more than 3 out of 5 customers prefer retail technologies and innovations as they help improve their shopping experience, as per the National Retail Federation report. The availability of several distribution channels creates havoc and confusion, leading to inaccuracy and late deliveries. In order to retain the customers and provide quality service, it is of utmost importance to manage store fulfillment, e-commerce, and returns of the product. The availability of parcel sorters equipped with different styles drives the market growth.
Significant Growth in E-Commerce Industry
The global e-commerce industry is growing at an unprecedented rate and is the largest consumer of the material handling system industry. The customization and use of AI by e-commerce websites are augmenting the sales in the industry. Rising consumer income, changing fashion trends, and increasing standard of living drives the e-commerce industry growth.
The exponential growth of the industry has urged the need for distributors that are in close proximity to the customers. With the rising number of customer base and availability of a variety of products on a single website, the distribution of the products has become difficult as there are fewer items per order. The traditional unit sorter is designed to accept 15–20 items and is not capable of handling large volumes of orders. Thus, the distributors seek parcel sorting equipment that can provide space efficiency, which further allows them to keep up with large volumes.
The use of parcel sortation systems offers excellent flexibility to handle incoming returns and outgoing orders at the same time on the same sorter, eliminating the need for two machines and processes. The capability of the sorter in efficiently handling 10–3000 destinations have significantly driven its demand in e-commerce and e-tail industries.
Figure – Internet Users Distribution in the World, 2020 (Quarter-1)
The number of internet users is multiplying in emerging markets. Asia accounts for 50% of global internet users, presenting ample growth opportunities for e-commerce players. Under the backdrop of favorable government norms, the e-commerce players are getting involved in cross-border retail and social media marketing for influencing customers. Almost 50% of online shoppers have stated that images helped them in their purchasing decisions, according to a survey by Google. To attract more consumers, e-commerce players are establishing extensive distribution networks.
Development of Autonomous Sortation Systems
The key market players are investing heavily in R&D activities to gain a competitive edge. The power of AI is accelerating development in almost every industry and has significantly contributed to the growth of the material handling system industry. The companies are developing robust sortation systems to provide same-day delivery. Moreover, the advancements and considerable investments in developing the future of robotics drives market growth. The postal industry is threatened with significant challenges and needs upfront investment, as current sorting systems are unable to reach full capacity.
The fluctuating demand and unprecedented volumes of e-commerce orders due to increasing popular events, such as Black Fridays and many others, exert pressure on existing logistics infrastructure. Globally, industries are transforming and incorporating cutting-edge technologies to meet growing demands. The distributors are continuously planning for the future and ways to be ahead of the global competition in order to achieve considerable returns on investment.
The automated parcel sortation systems offer rich data insights for operational efficiency and customer satisfaction. Modern sorters equipped with flexibility and scalability help the retailers and shippers expand their assets as per the business trends. For instance, Unmanned Life developed an autonomous parcel sorting system in Europe for Swiss Post in 2018, with an average throughput of 465 parcels per hour.
Parcel Sortation System Market: Segmentation
Sortation Systems to Gain Popularity in Retail and E-commerce Sector
The e-commerce sector holds the largest market share on account of its exponential growth rate and rising demand for automated sorting systems. The global retail industry has emerged as one of the fast-paced industries due to changing consumer expenditure patterns and the emergence of several new market players.
Changing customer lifestyle, coupled with rapid digitalization, provides an impetus to the segment growth. As per Japan’s Ministry of Economy, Trade, and Industry, the global e-commerce market generated about USD 2.84 trillion of revenue in 2018, and the number is anticipated to double during the forecast period. Additionally, the COVID-19 outbreak is projected to surge the demand for e-commerce shopping platforms to avoid crowded areas.
Figure: Internet Users in India, 2017–2021 (Million)
Rising internet penetration has compelled the retail stores to shift towards e-commerce business models, resulting in a need to streamline their operations in response to a significant rise in distribution volume. The emergence of a one-day delivery facility provided by the e-commerce players is increasing stress in the distribution center operations.
The e-commerce delivery centers are equipped with high throughput to meet their function of delivering a large number of parcels and items to customers with high precision and speed. In addition, labor shortages and reduced working hours are subsequently surging the demand for automation and unmanned sorting systems.
Rising Number of Travelers to Surge the Demand for Sortation in Airports
The economic development in the emerging countries is surging the air-traffic across the globe. As per the statistics published by the International Air Transport Association (IATA), the global passenger numbers reached 4 billion in 2017 and is projected to reach 8.2 million by 2037.
In line with this, the governments in the emerging nations are heavily investing in developing smart airports to offer greater convenience. Thus, the growing number of air passengers and shifting preference towards smart airports with enhanced comfort, safety, security, and provision of luxury drive the market growth. As per the IATA organization, over 90% of B2C e-commerce is performed by air transport.
Figure: International Tourism, Number of Arrivals, 2011–2018
IATA developed a fast travel program to drive the self-service options in order to address the rising consumer demand, improve airport efficiency, and enhance customer satisfaction. The air travel industry is employing efficient airport baggage handling systems, with the capability to improve airport efficiency and enhance customer service. This is anticipated to upsurge the capital investments in the air travel sector, further driving the market growth.
Parcel Sortation System Market Segmentation
Central and South America and the Caribbean
The Middle East
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