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Microfulfillment

Ultra-Fast, Hyperlocal Order Fulfillment

As online shoppers' demand for same-day delivery or pick up grows, retailers are increasingly filling orders directly from store locations in the customer's own neighborhood. But crowding store aisles with workers picking items for online orders is not only labor intensive, it also detracts from the in-store buying experience. Retailers need faster, more efficient order fulfillment methods in order to provide same-day service and still profit.

One possible solution is microfulfillment. Microfulfillment seeks to minimize travel time and cost, increase labor efficiency, and ultimately speed up online order fulfillment. Using dense, flexible centralized storage they are able to fulfill online orders from store and fulfillment locations close to customers. With microfulfillment, retailers can provide customers with the convenience of online buying and ultra-fast fulfillment via pick up or delivery in just a few hours.

 

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What is Microfulfillment?

Originating in the grocery sector, microfulfillment is a strategy for retailers to fill online orders from existing retail stores or "dark stores" located near the customer, with the goal of minimizing shipping and labor costs while meeting customer demand for fast order fulfillment. Instead of the labor-intensive approach of workers walking up and down aisles to fill online customer orders, a centralized storage and picking location is created where most orders can be filled, increasing picking efficiency and fulfillment speed. 

While some microfulfillment strategies depict an automated order fulfillment system in the front of the store with customers walking up to retrieve their filled orders, these microfulfillment centers (MFCs) can also be located in the back warehouse area and accessible only to employees, or even in separate microfulfillment centers or "dark stores."

 
Microfulfillment Order picking

Strategies

While microfulfillment is mainly used to describe solutions in existing retail stores, there are other related fulfillment strategies that are also worth considering.

In-Store
Microfulfillment centers are created inside existing retail space to help quickly and efficiently fill both online and in-store orders that are either picked up in-store, curbside or delivered to the customer. Caveats to the in-store microfulfillment strategy include taking up valuable space inside already constrained retail stores, and the cost of installing microfulfillment centers in multiple retail locations. 

Dark Stores
Empty storefronts are used as small fulfillment centers that fill online orders and can even service local retail locations. These "dark stores" are not open to the public. Orders filled can be picked up curbside, dropped off at retail locations for pick up, or delivered directly to customers. One dark store could potentially service several existing retail locations, which greatly reduces the space and cost issues involved with in-store microfulfillment. These dark stores can be formatted utilizing lower cost, semi-automation, such as Automated Mobile Robots and automated sortation technologies to aid manual picking efforts, or be fitted for high-automation goods-to-person systems.

Metro Ecommerce Centers
Small fulfillment centers or metro ecommerce centers (MECs) are created in dense urban or metropolitan areas to serve local ecommerce customers. Orders are delivered or shipped to customers directly from the MECs.

 

 
In-Store Microfulfillment Using AutoStore

Considerations

Online Order Volume
Store locations that are considering microfulfillment need to generate enough online sales to justify the cost. Without sufficient order volume, the savings from reduced labor costs and increased efficiency will not offset the cost of implementation. 

Space
For existing stores, there must be space available to accommodate a microfulfillment system, either through renovation or expansion. In-store microfulfillment automation is designed to work in small, back-of-store footprints with low clearance heights. Dark stores require available retail space that meets the size and cost requirements in the area where demand exists. 

Final Mile Costs
Because microfulfillment is not a one-size-fits-all solution, it is vital to explore options for distributing the products to the customer to ensure an acceptable ROI. Some may include:

  • Pick up in-store
  • Ship to customer
  • Store delivery service to the customer
  • Third-party delivery to customer

Reducing final mile cost is generally a major positive contributor to ROI. All of these variables should be explored before deciding on microfulfillment. 

 
Goods-to-Person Picking Improves Efficiency

Microfulfillment in Grocery

Grocery faces its own challenges when considering microfulfillment operations and opportunities for efficiencies. Similarly centered around convenience, quality and speed, grocery needs to account for:

  • Perishable foods
  • Temperature variances - fresh, refrigerated, frozen goods
  • Thousands of product SKUs
  • Curbside pickup, local delivery and third-party providers
  • Services that vary from within the hour, same-day and next-day services
  • Accurate product availability on customer-facing and internal platforms

Adding to that includes identifying the best way to meet customer demands when adapting your current retail location to meet both on-site customer shopping and employee picking for digital orders. To achieve a positive ROI and customer experience, it’s important to evaluate your in-store workflows. Placing products in optimal locations and restocking according to customer demands is essential to a smooth operation and the appropriate management software can help you achieve just that. Above all else, the goal is to ensure that you can stay profitable with the least amount of disruption.

 
Grocery Order Fulfillment


Read More About Microfulfillment

Microfulfillment Part 1: What is Microfulfillment?

Microfulfillment Part 2: Pros and Cons


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