An efficient supply chain — complete with strategically-placed micro-fulfilment centers — helps grocery retailers keep up with eCommerce demand.
As the prevalence and convenience of eCommerce continues to grow, almost no market or industry remains untouched. New patterns of purchasing present exciting opportunities for retailers, including grocery stores who can capture new customers through online orders. In fact, research shows that 37 percent of shoppers have bought groceries online in the past year, compared to 23 percent the year prior. That’s an estimated increase of 35 million customers who are now shopping for groceries online.
Meeting the demands of eCommerce isn’t a brand new challenge for grocery suppliers, though strategies have changed over the years. In the past, grocery stores filled eCommerce orders with in-store picking — personal shoppers who went through the store to fill multiple orders for customers. However, this method had many drawbacks. Shopping aisles became clogged with big, clunky carts, and in-store inventory was greatly reduced, as traditional shoppers found themselves competing with those purchasing online.
This has prompted grocery stores to switch to off-site micro-fulfillment centers. Often located in urban areas, these conveniently-placed centers store products to fill online orders. Fruits, vegetables, and other items are picked, packed, and then sent to the retailer. As consumers do not visit micro-fulfillment sites themselves, they generally head to the grocery store to pick up their completed orders.
eCommerce is rapidly driving changes to traditional food supply chains, and large grocery suppliers have already started using the micro-fulfillment model to meet online demand. In order to reduce overhead costs, increase efficiency, and capture new customers, many smaller grocery stores are also adopting this innovative approach.
How Does Micro-Fulfillment Work?
When an online order comes in, pickers in the micro-fulfillment center gather all the items and transport them back to the main grocery store. In many cases, customers don’t even need to get out of their cars to collect their orders — an employee comes directly to them, creating a quick, convenient experience.
Large retailers like Amazon and Walmart that offer both delivery and in-store pick-up are the primary drivers of the micro-fulfillment trend. Walmart in particular estimates that 11-13% of their customers now use grocery pickup. In order to remain competitive, traditional grocery stores are evolving to meet customers’ expectations. The big question is: How can smaller grocery stores implement micro-fulfillment centers at the lowest cost?
Micro-fulfillment models can initially be more expensive to set up, but when placed strategically within a delivery route, these centers actually streamline the delivery process. They can house more food than traditional grocery stores, and fulfill orders faster. By boosting customer service and convenience — some centers now offer prepared meal pick-up, as well — grocery stores are hoping to attract customers like working couples who don’t have time for traditional grocery shopping.
In addition, the micro-fulfillment model has the potential to reduce obstacles associated with last-mile delivery. By placing these small warehouses in dense urban areas, retailers can minimize the distance between goods and consumers. This reduces the margin for error and ensures that customers receive their orders on time. Plus, due to their small size, micro-fulfillment centers are more affordable to maintain than large automated warehouses.
What Does the Future of Grocery Micro-Fulfillment Look Like?
While micro-fulfillment centers largely rely on manual picking, trends are moving more toward automation. In some instances, pickers are using headsets and voice technology to coordinate fulfillment of multiple orders at the same ime.
In addition to these tools, warehouse robotics innovations are expected to play an important role in the future of micro-fulfillment. Warehouse robots are a long way from being able to replicate the attention to detail that human workers provide, but incorporating them into the process will certainly make order fulfillment quicker and cleaner. Retailers can use new technology to rapidly determine the necessary infrastructure, hardware, and pick paths that would most enhance efficiency.
The micro-fulfillment center model began as a simple plan to meet the demand of online shoppers. However, as eCommerce becomes more common, technological solutions need to be increasingly agile in order to drive growth in the industry. Some micro-fulfillment centers currently provide products for up to 15 retail stores, which requires a lot of grocery logistics planning and coordination.
The goods news is that warehouse management grocery distribution software, paired with a well-organized and methodical supply chain, will likely make ordering and picking up groceries more convenient than ever. With the help of flexible technology, grocery stores will be able to meet consumers’ evolving needs and stay competitive amid the rise of large retail chains.