Earlier this week Metapack, the leading carrier management system vendor, reported that it processed 13 million parcels over the Black Friday weekend. Given an average transaction size of the order of £50, that represents around £650m worth of sales or, at 100 parcels per van, an amazing 130,000 delivery vehicles full.
Carrier management systems are used by retailers to print labels and provide other services which enable and support selling online. These include allocation of parcels to the most appropriate carrier, tracking and tracing, returns and reporting on carrier performance. As such, while they have a lower profile than parcels carriers or even warehouse operators, they are a key part of the value chain responsible for getting online purchases to consumers.
Our recent research in the area found that it was now a £600m global market, with the UK being the most advanced country. This is due primarily to the large number of carriers operating in the market, the high level of cross-border sales and the efforts of Metapack, the global market leader in the area, which works for many leading retailers and consumer brands worldwide and is now owned by Stamps.com of the US. The Nordic countries are also an important region. They share some characteristics with the UK, such as multiple carriers and high level of cross-border sales, and are home to other leading suppliers such as Consignor and Centiro.
Each of the main markets still has a different set of providers, although there is convergence as the leaders expand internationally. Other national differences are that in-house systems are very common in Germany while systems provided by FedEx and UPS, as well as warehouse management system modules, are widely used in the US.
Business models vary according to what the supplier is from pureplay carrier management system vendors such as Metapack or Centiro to those which bundle a system as part of a broader service offering with different combinations of activities carried out, including the following (illustrated in the chart above):
• Management of the data relating to a parcel transaction and printing the label containing the data – pureplay carrier management system. Pureplay vendors must charge a commercial rate for their offering but bundled providers may use their system as a promotional offer, eg GFS provides its system free of charge to its reseller customers.
• Acting as a reseller of parcel capacity – buying in bulk and taking a margin by selling to smaller customers who could not obtain such favourable terms. Some resellers focus on the C2X parcel segment (consumers and small businesses) eg Parcel2Go, Parcel Monkey.
• Handling of the physical parcel – consolidator
• Fulfilment provider offering a one stop shop for management of the entire fulfilment process including all of the above activities
As is the case in many markets, one company not named in the chart is significant by its absence – Amazon. Amazon has its own system which it uses for its own sales and those of its marketplace sellers. Amazon’s ongoing share gain in online retail means that the addressable market for carrier management system vendors is necessarily growing more slowly than online retail as a whole.
More on the market can be found in our recent report, Carrier Management Systems Market Insight Report 2018.