The rise of micro-fulfillment solutions

The rise of micro-fulfillment solutions

Ecommerce sales have skyrocketed during the COVID-19 crisis and all indications point to the continuation of this explosive trend. As supply chains strained under the increased demand, retailers in an escalating arms race to fill orders quickly scrambled to find innovative ways to expedite deliveries.

With expedited shipping no longer a luxury, but rather an industry standard, market leaders are aggressively investing in reducing delivery times, and the biggest players are often able to drop packages on doorsteps in hours, not days. Indeed, the ability to offer competitive fulfillment times has become a major battle ground for the industry.

What is micro-fulfillment?

Micro-fulfillment strategies have emerged as one of the leading solutions to meet these consumer expectations. While the term’s definition can vary, micro-fulfillment for our purposes refers to using a network of retail locations or micro-fulfillment centers acting as distribution centers to handle everything from receiving an online order, packing and last-mile delivery.

The approach aims to take the speed of localized, in-store pick-up and combine it with the efficiency of large, automated warehouses.

While micro-fulfillment is trending, it is not a new phenomenon. A large automotive parts retailer adopted the technique years ago, pledging the ability to fulfill a customer order in-store in less than an hour to combat abandonment occurring when they did not have inventory in-stock. They achieved this improvement by placing hub stores with larger stock capacity within striking distance to their smaller locations. These hub locations would receive more frequent deliveries from traditional distribution centers, sending regular and as-needed replenishments to the smaller locations.

Growing popularity

The gold standard in shipping times and the force most responsible for the trend in condensed shipping times, Amazon has devoted billions to strengthening its shipping infrastructure. Structured around nearly 200 strategically placed fulfillment centers powered by technology, Amazon’s innovation has forced other retailers, both large and small, to adopt.

Walmart has demonstrated that it can leverage its 5,000+ stores across the United States to deliver online orders faster. Earlier in 2020, the retail giant launched its Alphabot system, which uses autonomous carts to retrieve ambient, refrigerated and frozen items. The products are then brought to a workstation where a Walmart associate checks, bags and delivers the final order.

Similarly, Apple has signaled that it will begin shipping to consumers from its retail locations, which the company has traditionally sent directly from China or through its US warehouses.

This trend is not limited to bigger players like Walmart and Amazon, but is becoming prevalent across retailers. According to Fillogic, more than 60% of mall-based retailers today currently have ship-from-store capability, with malls averaging 950 to 3,200 packages shipped daily.

What’s coming?

Micro-fulfillment has proven to be a viable solution to expedite shipping times and will continue to grow in popularity. Centers as small as 10,000 square feet are becoming more common, as a reduced footprint can simplify the distribution process and increase efficiency.

As AI and the ability to manage massive amounts of data continues to evolve, micro-fulfillment will become even more streamlined. The capacity to process orders, make decisions on which distribution center is best positioned to fulfill them and then determine which store location will receive them is a massive undertaking and one that is best suited to AI oversight.

When considering the impact on traditional distribution centers responsible for replenishing the micro-fulfillment inventory there is a backflush effect. These replenishments are significantly more frequent than a traditional model, which greatly alters the pace and volume of picking in the distribution center.

For the recipients of that inventory – particularly traditional brick and mortar locations that are doubling as micro-fulfillment centers – there is a training dilemma. Conventional retail workers are not trained pickers or shippers and must be prepared to properly perform these duties.

To address training these employees (and new hires in dedicated micro-fulfillment centers acting as smaller distribution centers) voice automation provides a remarkable solution. Not only is a voice solution easy and fast to train new workers, but it can also adapt to the many languages that workers speak. While some organizations hire early with the expectation of spending up to six weeks training new employees, Voxware often enables new hires to complete their training and start working within days or – in most cases – hours.

If you are looking into implementing micro-fulfillment solutions – or enhancing existing framework – contact us today to see how Voxware can help.

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