It’s no secret that ecommerce sales skyrocketed during the COVID-19 crisis, and recent 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 accelerate 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 this purpose refers to using a network of retail locations or smaller fulfillment centers, acting as distribution centers to handle everything from receiving an online order to 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 of 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.
The gold standard in shipping times and the force most responsible for the trend of 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 adapt.
Walmart has demonstrated that it can leverage its nearly 5,000 stores across the United States to deliver online orders faster. In early 2020, the retail giant launched its Alphabot system, which used 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.
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.
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 weeks training new employees, recent advancements in voice can have workers picking in less than an hour.
As shopping behaviors continue to shift, retailers will need to do the same or face losing market share. With the help of flexible technology, micro-fulfillment center workers can be optimized to meet the evolving needs of today’s consumer.
Keith Phillips is President and CEO of Voxware, Inc., a leading provider of voice-based warehouse automation software and supply chain analytics solutions. Companies rely on Voxware to improve speed, accuracy and efficiency through multimodal technologies across all functions and workflows in the distribution center.