Global Markets for Warehouse Management Systems and Related Services
The global WMS market, including software, hardware and professional services, has grown steadily since the first systems were introduced in the mid-1980s. The growing popularity of the Internet as a sales channel helped propel total WMS sales to more than $1.8 billion in 2001.
The market is projected to approach $4.9 billion in 2006, a 22% average annual growth rate (AAGR).
The emerging markets of Asia and Latin America should experience the most rapid growth, increasing their share of the world market to 13% in 2006. In contrast, both North America and the traditional markets of Asia-Pacific are expected to lose market share, North America from 53% to 50% and Asia-Pacific from 13% to 11%.
While the Tier 1 market segment (end-users with annual revenues over $1 billion) will continue to grow in dollar terms, it will go on losing market share to Tier 2 ($250 million - $1 billion) and Tier 3 (less than $250 million) end-users. WMS sales to Tier 3 firms are expected to grow at an AAGR of 30%, compared with 23% for Tier 2 and 15% for Tier 1.
STUDY GOALS AND OBJECTIVES
Warehouse management software (WMS) automates the flow of information and coordinates key activities in a warehouse or distribution center, in order to maximize efficiency and increase customer satisfaction. This study of the global market for WMS through the year 2006 incorporates the latest information on and technical trends in the USA and other key international markets and analyzes their impact on vendors of WMS software and related products and services. The analysis is intended to facilitate strategic decisions in an increasingly crowded market, by answering such questions as:
- What are the factors driving market growth for WMS?
- Which market segments (geographical, vertical, size of firm) offer the best growth opportunities?
- Who are the market leaders and what new sources of competition are foreseen (e.g., full-featured WMS software from ERP vendors)?
- What WMS features and functions are needed for market success?
- Can suppliers win with a superior WMS point solution or is a product suite needed?
- How will new technologies such as electronic tagging and voice technology affect the market?
- What are the advantages and disadvantages of offering this solution in a hosted environment?
In recent years, several other studies on the global WMS market have been published by companies such as AMR Research, ARC and Gartner Group. However, there are several valid reasons for undertaking another study at the present time, i.e.:
The WMS market is dynamic. Some of the existing studies are more than a year old and are now clearly out of date. Even the most recent study was written before signs appeared of a possible slowdown in the WMS market, which through the first quarter of 2001 had seemed relatively immune to the softness in other software market segments. At least three of the seven WMS vendors that issue public financial reports indicated that their sales declined in the second and third quarters of 2001 compared to the same periods the year before. The present study will be the first to assess the impact of recent economic trends on the WMS market.
There is considerable disagreement among existing studies regarding the size and growth rate of the WMS market. Reasons for the wide variations among estimates include the difficulty of obtaining data on markets outside North America and the different treatment accorded to third-party vendors of WMS-related integration and consulting services. Some estimates of the total size of the market are difficult to reconcile with what is known about WMS vendors' sales.
Existing studies understate sales of third party WMS integration and consulting services. WMS vendors' sales figures include revenues from non-software sources, such as system integration and other consulting services. However, existing market studies do not appear to account fully for integration and consulting services provided by third-party system integrators (3PIs) and consultants, for which the value has been variously estimated at between 50%-250% on top of the services provided by WMS vendors. For the sake of accuracy and clarity, this study separates WMS-related services from software sales, and includes services provided by third parties such as systems integrators.
New markets for WMS are emerging. Existing studies generally focus on countries that historically have accounted for the bulk of WMS sales: North America, Western Europe, Japan, Australia and New Zealand. While these historically important markets will continue to be significant, other nations will emerge as important WMS markets over the next five years. This study will identify the, "emerging markets" most likely to become major markets for WMS and provide a framework for WMS vendors and service providers to exploit these new opportunities.
The report is intended especially for decision-makers in the WMS software industry and related sectors, including:
- Related software
- WMS-related hardware, such as barcode readers
- Integrators and consultants
SCOPE AND FORMAT
This report is an analytical tool with the primary purpose of describing the international market for warehouse management systems and related software, hardware and consulting services. The report consists of the following major sections:
- Industry structure;
- Market size and segmentation, including market drivers and historical and projected sales by product/market segment (e.g., geographical markets, end-user industry and company size);
- User requirements, competition and market shares;
- Conclusions: trends in WMS technology/functionality, emerging markets, and industry structure.
An appendix contains profiles of major vendors of WMS products and services.
METHODOLOGY AND INFORMATION SOURCES
The findings and conclusions of this report are based on information gathered from personal contacts with vendors and users of WMS software and related products and services and other key informants. Additional data were obtained from extensive reviews of secondary sources such as trade publications, trade associations, company literature, and on-line databases. Our final analyses and projections are based on a combination of a consensus among the primary contacts combined with our understanding of the impact of trends from a historical perspective.
The study generally incorporates the most recent data, including 2001 where available. However, the base-year for most of the projections is 2000, which is the latest year for which a consistent data set is available.