Online sales have been growing fast since 2020, but this also brings new challenges for retailers. While e-commerce can increase total revenue, the order picking and delivery costs can reduce profit margins. According to Berkshire Grey, retailers that rely on manual labor only can lose $7 per order with curbside pickup, and $13 per order with delivery included. However, micro-fulfillment centers can use automation to reduce both fulfillment cost and picking time.
The following are some companies that are emerging as leaders in warehouse automation and micro-fulfillment in the US market.
The world’s largest retailer has started deploying micro-fulfillment technology with multiple partners, which include Alert Innovation. According to Progressive Grocer, Walmart announced in January 2021 that it would be installing more than 100 MFCs in the short term. Many of these MFCs will be deployed in existing stores, and others will use new locations that will be dedicated exclusively to e-commerce order fulfillment.
Ahold Delhaize created Peapod Digital Labs, an e-commerce commercial engine for the grocery sector. The company is collaborating with The Giant Company to deploy an MFC in Philadelphia, which will deliver 15,000 online orders per week. The project will use the SynQ software from Swisslog, a storage and retrieval system from Autostore, and manual picking technology developed in-house by Peapod Digital Labs.
Swisslog is a provider of logistics automation solutions for distribution centers and warehouses, and the company has been focused on expanding its US operations. Since September 2020, the company has been working with HEB to deploy MFC technology, which will help the supermarket chain fulfill its online orders more efficiently - this includes curbside pickup and delivery. In addition, their SynQ software is being used by Ahold Delhaize for a micro-fulfillment center in Philadelphia, as mentioned above. Swisslog is also negotiating with 20-30 smaller retailers, according to Progressive Grocer.
At the ProMatDX 2021 supply chain conference, Swisslog gave users the opportunity to pick gifts, and they could see a livestream of the gifts being picked with the company’s micro-fulfillment technology.
The Kroger Company has been working on a “macro-fulfillment” strategy: using warehouse automation while keeping the large scale of a traditional distribution center. While typical MFCs normally use a space of less than 10,000 sf, Kroger is planning to deploy automated fulfillment centers of up to 375,000 sf. The first of these customer fulfillment centers started operating in Cincinnati in April 2021, and nine more are planned.
Instacart started as an order picking and delivery company in June 2012, and the company is now expanding its services to include micro-fulfillment.
According to The Financial Times, Instacart is already negotiating with technology providers like Alert Innovation and Fabric, with plans to deploy 50 micro-fulfillment centers throughout the US.