Micro Fulfillment Centres | Why are E-retailers Inclined Towards Them

The world of e-commerce continues to grow, and businesses must adapt as customer buying patterns and delivery expectations shift. The concept of micro-fulfillment comes into play here.

Micro-fulfillment refers to small-scale distribution hubs located closer to the end user. Micro-fulfillment centers (MFC) are small urban warehouses that are often tied to local retail establishments or housed within bigger distribution centers in the vicinity.

These smaller, more compact fulfillment facilities typically use high-end automated equipment to complete online orders more quickly, efficiently, and with fewer people on the premises. If you’re having trouble getting shipments to your consumers faster.

What is Micro-Fulfillment?

Micro-fulfillment is a concept for improving delivery times by locating small-scale warehousing operations in highly populated urban areas.

In recent years, delivery in two days or less has become the standard. It’s difficult to stay up with Amazon or Walmart if you’re not one of their competitors. The bar has been increased to same-day delivery in some cities.

Last-mile expenditures account for 41% of a product’s overall supply chain costs. Micro-purpose fulfillment is to bring inventory and fulfillment as close to the customer as possible, allowing smaller shops to compete on shipping timeframes. In terms of infrastructure and shipping costs, meeting two-day or two-hour delivery times from large regional DCs is less expensive. The last mile is made shorter and less expensive with micro-fulfillment.

Micro-fulfillment is on the rise

How has the pandemic boosted the micro-fulfillment trend?

Micro-fulfillment was already a big part of the customer experience before COVID. The epidemic, on the other hand, provided a new dimension to it, emphasizing the need of preserving market share. The implementation of confinement and isolation measures in March 2020 resulted in a significant drop in foot traffic in physical stores. Consumer demand for same-day fulfillment exploded during the same period. Retailers were compelled to pivot and explore new ways to increase the efficiency of their online delivery services, as you might expect.

Why Micro-fulfillment Centers are a big deal for retailers?

The most significant battle for market share in retail right now is to provide best-in-class last-mile delivery services. This is especially critical when etailers confront rising competition and client expectations in terms of delivery times and long-term viability. MFCs enable you to overcome all of these challenges and, as a result, obtain a competitive edge in key urban, targeted markets.

Do MFCs offer optimized inventory and omnichannel fulfillment?

Automation allows you to spread your inventory across many channels or locations, giving customers the option of how they wish to get their products. For example, grocery businesses combine traditional brick-and-mortar shopping orders and instant delivery. In the case of a supply chain disruption, an MFC in this store’s current warehouse space would select and pack orders for BOPIS while also guaranteeing that the store location had emergency supplies.

Similarly, an eCommerce business could employ an MFC for top-selling SKUs that are generally purchased separately. This would put products closer to clients and allow for faster fulfillment for the majority of its inventory, while other products would be delivered from a typical warehouse. This allows for faster fulfillment and reduces the amount of space a company would need to rent (directly or through a third-party fulfillment partner) in high-cost metro areas.

THE BOTTOM LINE

Micro-fulfillment centers offer a flexible answer to numerous trouble spots and areas in need of cost reduction as many retailers migrate to automated warehouses. Using an MFC reduces both the cost of choosing and the cost of real estate because of the smaller size. With space at a premium and client access a top priority, it’s easy to see why so many businesses are looking into this popular option.