Key Market Dynamics in the Warehouse Management System Market

The warehouse management system market (WMS) was valued at USD 2.4 billion in 2020 and is likely to reach USD 5.1 billion by 2025, at a CAGR of 16.0% from 2020 to 2025. A WMS is a software application that helps manage operations in warehouses in the most efficient and productive manner. Functions of these systems include inventory control, labor management, yard management, and dock management, among others.

Warehouse Management System Market Dynamics

Driver: Increasing growth in e-commerce industry due to onset of COVID-19 pandemic

The enforcement of social distancing, lockdowns, and other measures in response to the COVID-19 pandemic has led consumers to pursue online shopping. This has led to a spike in business-to-consumer (B2C) sales and an increase in business-to-business (B2B) e-commerce. The increase in B2C sales is particularly evident in online sales of pharmaceuticals, household goods, and food. This has resulted in tremendous short-term growth in the e-commerce industry.

The increasing number of online channels is influencing consumer buying behavior. Companies operating in the fast-paced e-commerce industry need to accelerate their order fulfillment and shipping processes to maintain a competitive edge in the industry. A significant shift in consumers’ purchasing behavior has resulted in the increased implementation of real-time WMS software solutions for efficient order processing, picking, packaging, shipment tracking, and route planning.

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Restraint: Lack of workforce for maintenance of WMS due to onset of COVID-19

Warehouse Management System is a complicated system that requires constant maintenance and optimization in regular cycles to ensure proper functioning. Due to COVID-19, various governments around the world have imposed lockdown, which has led to a shortage of manpower in warehouses around the world. SMEs that use conventional WMS are suffering immensely due to the absence of skilled workers to handle maintenance operations. SMEs contribute significantly to the market of developing economies, and this will cause a short-term slump in the demand for WMS in these regions.

Opportunity: Rising investment of multinational companies in emerging economies

Companies based in developed economies are looking to expand their operations in emerging economies owing to cheap labor costs and lower real estate rates. In addition, rapid industrialization in emerging economies, including India, China, Africa, Brazil, Mexico, and Indonesia, has resulted in significant investments in infrastructure development.  FDI investments by global companies are generally used for setting up new manufacturing plants in emerging economies. This development has led to a requirement for advanced and sophisticated warehousing facilities to integrate and manage supply chain networks. Surge in new investments to enhance the supply chain capability of emerging economies has opened up huge growth opportunities for the warehouse management system market.

Challenge: Lack of awareness about benefits of WMS among small-scale industries

Small-scale industries operate their warehouses in a traditional manner. As the annual income of small-scale industries is not very high, investments to set up WMS seem to be an unnecessary expense for these business owners. Owing to the reluctance to replace traditional systems and limited growth plans, business owners in small-scale industries fail to recognize the benefits they can avail by using WMS. Further, significant investments associated with the deployment of WMS and high upfront costs restrain the adoption of WMS.

Key Market Players

Manhattan Associates (US), Blue Yonder (JDA Software) (US), HighJump (Körber) (England), Oracle (US), and SAP (Germany), Infor (US), PSI (Germany), PTC (US), Tecsys (Canada), BluJay Solutions (UK), Epicor Software (US), 3PL Central (US), Cantaloupe Systems (US), Datapel (Australia), Dematic (US), Generix Group (France), Mantis (US), Made4net (US), Microlistics (Australia), Nulogy (Canada), Reply (Italy), Softeon (US), Synergy Logistics (UK), and Vinculum Solutions (India) are the players in the warehouse management system market.