Market Trends of NA Warehouse Robotics Industry
This section covers the major market trends shaping the North America Warehouse Robotics Market according to our research experts:
Growth of E-commerce in Developing Countries
- E-commerce is growing at a very fast rate from the last few years. Many companies have moved from physical retail to online to better cater to consumer requirements. Many of the large companies have bet big on the technology, to provide reliable consumer service. North American region has been pioneers in online retail and have established markets with large players.
- E-commerce penetration amounts to 62% in Tier 3 and 4 cities and 89% in Tier 1 and 2 cities. The online consumers count in Tier 3 and 4 cities is around 257 million, which is larger than that most of the countries in the world. For example, Alibaba logistics arm itself owns 180,000 express delivery stations in China. In addition the specific sale days in festive season requires them for scale up and down thus driving the demand for solutions that have the flexibility to volume changes in material handling.
- The relentless march of e-commerce is continuously putting tremendous strain on distribution and fulfillment operations. The online retail sales reached 8% of total retail spending in 2018, as compared to 7.4% in 2016. Moreover, the digital buyer penetration worldwide increased from 42.7% in 2014 to 47.3% in 2018, according to Invesp.
- This has led to an increasing pressure on supply chain activities. According to a recent survey conducted by Honeywell Intelligrated, of the 171 US-based material-handling executives, 35% of executives found that fulfilling more orders (faster and at lower costs) was their primary challenge. While their secondary concern was to reduce errors in order processing/improving order accuracy and obtain enough labor to support operations.
- Furthermore, more convenient cross-border payments methods like UniPay and PayPal have also boosted the transactions on the e-commerce platforms. With such reliable and convenient cross border transactions and boom of e-commerce, consumers have reduced their patronage to brick and mortarstores for shopping. This is resulting in the expansion of online retail market and companies are thus investing heavily to improve the technology. With logistics playing major part in online retail, warehouse and delivery stations are one of the crucial points in the e-commerce segment.
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United States is Expected to Witness Significant Growth
- Growth in e-commerce is the primary reason for the increasing application of robots in warehouse and distribution centers in the United States, in addition to advancements in technology that have made robots better and smaller, lower costs, and a shortage of labor in some places.
- The country is witnessing the decline of middle-skill occupations, like manufacturing and production jobs, and the growth in both high and low-skill occupations, like managerial jobs on one end and jobs that assist or care for others. This is now popularly know as job polarization, which is driving the adoption of automation of various repetitive, manual, and low skill tasks.
- Also, the major companies with many warehouses and distribution units are utilizing acquisition strategies to reduce the labor cost and increase their profitability. For instance, Amazon, the giant retail, spent USD 775 million in 2012 to acquire a young robotics company called Kiva Systems that gave it ownership over a new breed of mobile robots. This investment gave a technical foundation on which it has to build new versions of warehouse robotics, setting the stage for a potential future of the robots.
- In another instance, till 2020, Amazon has installed more than 200,000 mobile robots that work inside its warehouse network, alongside hundreds of thousands of human workers in the United States. This robot army has helped the company fulfill its ever-increasing promises of speedy deliveries to Amazon Prime customers.
- Furtheremore, according to the International Federation of Robotics, sales of robots in the United States had hit a new peak of almost 38,000 units and set a record for the eighth year in a row from 2010 to 2018. Robot density in the US manufacturing industry is more than double that of China and ranks seventh worldwide. The trend to automate production in both the domestic and global markets is the main driving force of robot installations in the United States. The general industry sector, particularly the food and beverage industry (+64%) and the plastic and chemical products industry (+30%), had the highest growth.
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