The global market for warehouse management systems (WMS) owes its success to the rise of digital technology and the explosive growth of the e-commerce sector. As the trend of bring-your-own-device gains momentum, the market for WMS solutions is likely to expand at a healthy pace.
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Here is a look at some of the prominent trends in the warehouse management systems market.
Higher Investment Costs Deterring Deployment of On-premise Warehouse Management Systems
Although on-premise warehouse management systems offer increased efficiency and result in low maintenance costs, high initial investments have restricted their deployment on a wide scale. Costs pertaining to user training, evaluation of hardware and software, initial testing, and tech support result in a longer wait for significant returns on investment (ROI) and budgetary restrictions in most companies limits the setting up of on-premise WMS.
On the other hand, cloud-based warehouse management systems and solutions offer lower total cost of ownership and almost no up-front costs. However, limited awareness about the benefits of cloud-based WMS has resulted in a lower rate of adoption. Thus, high initial cost of on-premise WMS and lack of knowledge about cloud-based solutions are likely to challenge the growth of this market.
Companies Up Investments as they Move Toward Digitization
There are several player offering warehouse management systems and solutions in the market today. However, SAP SE and Oracle Corporation dominate the global scenario, accounting for nearly 40.0% of the market in 2015. The rest of the market, is nevertheless, up for grabs and companies have been stepping up efforts to strengthen their foothold.
Emerging markets, especially those in Latin America and Asia Pacific, have gained much momentum in the recent past owing to low labor costs and thriving retail sectors. Expanding in these regional markets is one of the most fruitful strategies adopted by players in the warehouse management systems market. Brazil, Indonesia, India, and China have seen much activity in the recent past with companies looking to invest in these regions.
Apart from this, players in the warehouse management systems market are also adopting cloud-based technologies to cater to the growing demand in the manufacturing and healthcare sectors. A case in point would be SAP SE. In 2015, the company invested significant amounts in the SAP Innovation Center Network, in order to support its shift to the cloud.
Host of Benefits make Asia Pacific Attractive Investment Option
Asia Pacific has emerged as one of the lucrative markets for warehouse management solutions as globalization gains prominence. The massive scale and rapid pace of urbanization, coupled with increasing per capita income of the consumers in countries such as China, India, and Japan, has resulted in a booming retail sector. The transforming landscape of this industry also benefits from a thriving e-commerce sector, which increases the demand for warehouses with greater capacities. This, in turn, has led to the need for cost-effective and reliable warehouse management systems.
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Apart from this, the surge in mobile and Internet penetration, growing investments in logistics and infrastructure, and favorable government regulations that have opened the doors for foreign investments in retail have driven the deployment of warehouse management systems across the Asia Pacific region.