Report: 28% growth rate projected for U.S. 3PL ecommerce through 2020 as online buying expands

Armstrong & Associates has published a new report, “Rising Tide: The Rapid Growth of E-Commerce Logistics, 3PL Solutions, Last-Mile Delivery, and the Dominance of Amazon,’ which details rising third-party logistics (3PL) activity tied to the continued increase in ecommerce, as well as other related trends including logistics cost impacts and Amazon’s dominance in 3PL services.

The Census Bureau of the U.S. Department of Commerce reported adjusted retail e‐commerce sales in the second quarter of 2020 of $211.5 billion, a COVID‐19 driven increase of 31.8% from the first quarter of 2020, and a whopping 44.5% increase from the second quarter of 2019. E‐commerce retail now represents 16.1% of retail sales in the United States. The segment grew at a 14.6% Compound Annual Growth Rate (CAGR) from 2015 through 2019 and shows no sign of slowing, notes Armstrong & Associates.

Growing e-commerce sales are driving up U.S. e‐commerce logistics costs with a 19.9% CAGR expected through 2020. E‐commerce logistics costs currently account for 9.9% of total U.S. logistics costs.

E‐commerce is the fastest growing 3PL market segment. Retailers are increasingly relying upon Amazon and 3PLs to help manage omnichannel and e‐commerce supply chain operations. U.S. 3PL e‐commerce revenues reached $43.4 billion in 2019, and Armstrong & Associates expects 28% growth through 2020 as e‐commerce purchases continue to expand during the pandemic and companies continue to outsource logistics activities. With its dominant position, Amazon’s operations boast an estimated 60% market share of the U.S. E-Commerce 3PL market segment. As the report notes, while Amazon is often thought of as an Internet retailer, through programs such as Fulfillment by Amazon or FBA, it also effectively acts as a 3PL.

The report covers the growth of e‐commerce logistics in the U.S., e-commerce fulfillment and last-mile delivery, third-party logistics provider alternatives to Amazon, Amazon’s leading market position, and an “apples-to-apples” cost comparison between FBA and 3PL solutions using Armstrong & Associates’ proprietary e-commerce fulfillment pricing benchmarks from 21 3PLs representing over 1,000 customers. More information about Armstrong & Associates reports can be found here.