The pandemic accelerated the transition to digital shipping by about five years. Customers who were hesitant to purchase online were forced to change their habits. Customers are now more comfortable purchasing a variety of goods, such as home improvement accessories, health, and beauty products online.
Retailers quickly adopted micro-fulfillment tactics in response to the pandemic, even if they were not aware of it at the time. Micro-fulfillment strategies include a curbside delivery, buy-online-pick-up-in-store, and two-day or less home delivery.
Before further details let’s find out what micro fulfillment is.
What is Micro-Fulfillment?
Micro-fulfillment is a strategy for improving delivery times by locating small-scale warehouse facilities in densely populated urban areas closer to the consumer.
In recent years, shipping in two days or less has become the norm. In some cities, same-day delivery has also become a reality.
Micro-fulfillment aims to move inventory and fulfillment as close to the consumer as possible, allowing smaller retailers to compete on shipping times. In terms of infrastructure and shipping costs, meeting two-day or faster delivery times from large regions is less expensive. The last mile is made shorter and less expensive with micro-fulfillment.
What are Micro-Fulfillment Centers?
Micro-fulfillment centers (MFCs), also known as urban fulfillment centers, are small, highly automated storage facilities located near the end consumer to reduce the cost and time it takes to deliver goods.
An MFC is made up of three main parts:
- Online order processing management software
- Physical infrastructures, such as automated picking and transfer systems
- Packing personnel
MFCs are specially designed or dedicated spaces that can be established within a store’s existing facilities, where automated systems can be installed without the need for the facility to be expanded.
An MFC, once established, serves as a hub for online order fulfillment, ship-from-store orders, and local pickups within a specific region or postcode.
What are its Advantages?
The main advantage of a micro-fulfillment model is overall efficiency. Benefits can be broken down further as follows:
1. Improve Efficiency
MFCs are home to game-changing, efficiency-boosting technology that allows for sufficient flexibility and more eﬃcient picking than manual processes – some MFCs can process thousands of orders per week.
MFCs sometimes use robots to transport items within the storage area, and then a human worker packs the final order manually. AI software can also assist in optimizing the placement of various goods and their movement through the center.
2. Inventory on a small and local scale
Automation facilitates the distribution of inventory across multiple local and small-scale locations. With MFCs, e-commerce businesses deliver products to their customers faster.
3. Improved delivery times
Using a strategically placed MFC can speed up the last-mile fulfillment because goods delivered before time to consumers are always appreciated. Pickup and delivery times have shortened, with orders being delivered within hours of being placed.
4. Curbside and in-store pickup, as well as home delivery
Curb-side pickup and in-store collection are both terms for a ‘click and collect’ model in which customers purchase online and pick up at a store. The concept isn’t new, but with the extensive automation of MFCs, the process is less labor-intensive, more cost- and time-efficient, and the customer benefits from much faster last-mile delivery.
5. Total cost savings
Overheads in smaller MFC facilities are typically lower than in traditional warehouses. This is because of automated operations, lower labor costs, streamlined logistical operations, and lower logistics costs such as fuel and delivery fees.
Micro-fulfillment has been one of the most important trends to emerge during the Covid-19 pandemic, and it is expected to grow, with more than 10% of grocery sales across the globe.
Before the pandemic, consumers expected shorter and shorter delivery times – and this expectation is likely to increase post-pandemic. Therefore, the requirement for micro fulfillment centers will eventually increase.