The world of e-commerce is expanding, and firms must adapt as client purchasing habits, and delivery expectations alter. The principle of micro-fulfillment is at work here.
Small-scale distribution hubs placed closer to the end user are referred to as micro-fulfillment. Micro-fulfillment facilities (MFC) are small urban warehouses frequently linked to nearby retail outlets or housed within larger distribution centers.
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What is Micro-Fulfillment
Micro-fulfillment refers to placing small-scale storage operations in densely populated metropolitan areas to improve delivery times.
Delivery in two days or less has become the norm in recent years. Competing with Amazon or Walmart is impossible if you’re not a competition. In certain cities, the threshold has been raised to same-day delivery.
Last-mile expenses account for 41% of total supply chain costs for a product. Micro-purpose fulfillment aims to get inventory and fulfillment as close to the client as feasible, allowing smaller businesses to compete on shipping timelines. Costs associated with setting up the necessary infrastructure and transporting goods mean that meeting two-day or 2- hour delivery times from large regional DCs is more affordable. Micro-fulfillment makes the last mile less expensive.
Micro-Fulfillment Is Becoming More Popular
What Effect Has the Pandemic Had on the Micro-Fulfillment Trend
Before COVID, micro-fulfillment was already a significant element of the consumer experience. On the other hand, the outbreak added a new dimension to it by underlining the importance of maintaining market share. The installation of confinement and isolation measures in March 2020 resulted in a considerable decrease in physical store foot traffic. During the same time, consumer demand for same-day fulfillment skyrocketed. As expected, retailers were forced to pivot and investigate new ways to improve the efficiency of their eCommerce fulfillment services.
Why Are Micro-Fulfillment Centers Important to Retailers
Right now, the most important struggle for retail market share is to provide best-in-class last-mile delivery services. This is especially important when etailers face increased competition and customer expectations regarding delivery times and long-term survival. MFCs allow you to overcome these hurdles and gain a competitive advantage in major urban, targeted areas.
Do MFCs Provide Efficient Inventory as Well as Omni Channel Fulfillment
Automation enables you to distribute your inventory over several channels or locations, allowing customers to choose how they want to receive their products. Grocery stores, for example, combine regular in-store shopping orders with quick delivery. An MFC located in the current warehouse space of this company would pick and pack orders for BOPIS and guarantee the availability of emergency supplies at the store location in the event of a supply chain failure.
Similarly, an eCommerce company could use an MFC for popular SKUs that are often purchased separately. This would bring products closer to customers and allow for faster fulfillment of most of its inventory, while other items would be delivered from a standard warehouse. This enables faster fulfillment and minimizes the space a company would need to rent in high-cost metro areas (directly or through a third-party fulfillment partner).
Conclusion
As many retailers shift to automated warehouses, micro-fulfillment centers provide a customizable solution to several difficult spots and locations needing cost reduction. Because of its smaller size, using an MFC minimizes both the cost of selection and the cost of real estate. With limited space and a high priority on client access, it’s easy to see why so many firms are considering this popular choice. If you want to know more about 2-hour delivery services, contact us!
