Third party logistics will be a major growth industry over the next couple of years as most Web merchants look to offload the problems of packaging and dispatching online orders, one industry specialist has predicted.
Senior vice president of professional services at warehouse management systems developer Manhattan Associates, Neil Thall, said many online retailers had not automated their back office systems initially and were now struggling to deal with increasing sales volumes.
While some very large retailers such as Toys-R-Us were developing their own logistics systems to combat the problem, most would find it faster and more cost effective to contract the business out to third parties, Thall said.
He belives that much of this business was likely to go to delivery companies, such as Federal Express and UPS, which are looking to capitalise on their well developed infrastructure by developing Internet order fulfilment services.
"We're seeing existing companies going into this as an adjunct," he said. "It's a very expensive market to get into and we don't see too many startups [having a go]," he said.
Meanwhile Manhattan Associates plans to make it easier for companies to implement its PKMS logistics system by making the application available for rent via the Internet in the next six months.
Thall said Manhattan had not decided whether to work with a third party to deliver the service on a per transaction pricing model, or to set it up in-house.
"It could start out either in the US or Europe," Thall said. "We see a market in both places."
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