Interact Analysis Sees Warehouse Automation Services Market Doubling by 2025
June 1, 2021
Service contracts will become a significant source of regular revenue for OEMs and integrators
a new report on the warehouse automation service market,
Interact Analysis has revealed that soaring growth in
the warehouse automation equipment market is causing
parallel growth in the market for service contracts –
worth $4.3bn in 2020 and projected to grow to $8.7bn by
Global Warehouse Automation hardware revenues were valued at $19.6 billion in 2020. $4.3 billion in additional revenue came from after-sales services performed by the OEMs and Integrators. The “big four” service categories are remote services, on-site services, spare parts, and modernizations and upgrades.
As the installed base of automation projects increases so too will the service opportunity. Moreover, the complexity of systems, increased cost of downtime, and dynamic customer requirements make regular service and upgrades more critical.
A significant potential market for servicing exists beyond the share that is attributed to Warehouse Automation OEMS and Integrators. This includes customers where the maintenance and operations of equipment is predominately done in-house or outsourced to third parties.
It is estimated that an additional $4.9 billion of potential after-sales service revenue existed in 2020.
There were just over 35,000 active projects estimated to be in situ at the end of 2020. While this is a significant installed base representing 23% of the 150,000 warehouses globally, it includes various levels of automation of which 60% are the more basic, semi-automated conveyance and sortation systems.
The Americas and EMEA generated 80% of OEM service revenues in 2020. This was driven not so much by a disparity in installed base opportunity, but rather the higher likelihood of customers in those regions engaging with OEMs for regular servicing of equipment, as compared to APAC end users.
The increasing complexity of computer-controlled warehouse automation equipment should afford a greater degree of diagnostic and troubleshooting ability on the part of hotline services.
The research shows that the potential revenue generated
from offering a lifetime service contract to an
automation project is roughly equivalent to the original
cost of the project. So, in broad brush terms, a
whole-life service contract could double the original
revenue from the sale of the machinery. Furthermore, the
research shows peaks and troughs in the service cycle,
with the highs coming around the 5-, 10- and 15-year
marks, corresponding to times when parts are likely to
require replacement, and computers and control equipment
to need upgrading.
Dan Gilmore, Chief Marketing
Officer of Softeon commented, "Maintenance
contracts in warehouse automation have historically been
something of a tough sell, even before robot era. Many
companies think it's cheaper to just pay for service as
needed when something breaks, or they rely on internal
maintenance staff to do the work.
Bob Bova, President and CEO of AccuSpeechMobile added, "Warehouse automation and the expertise to configure and deploy the most impactful solutions is the largest reason AccuSpeechMobile has been installing voice automation solutions consistently since July of LAST year. The growth in both technology adoption and the services required for the quickest and most effective deployments will continue to expand as ecommerce grows and the difficulty to find workers continues."