Localized inventory and data
Micro-fulfillment centers feature highly compact, streamlined designs. This allows retailers to hold more inventory locally, reducing the chance that a customer will go to order an item, only to find it out-of-stock. This also allows retailers to gather localized data on their consumer base, such as information on brand preferences and order sizes. This data can be leveraged to create projections around inventory demand in specific areas, helping retailers improve customer service and shipping times.
Quicker order fulfillment
Micro-fulfillment centers are often highly automated, reducing the time spent on the picking and packing process, increasing productivity and driving down order fulfillment costs. Automated processes became especially important during the COVID-19 pandemic when labor shortages impacted retailers worldwide.
Faster delivery
One of the main reasons more retailers are implementing MFCs is that they reduce the costs of last-mile delivery. Last-mile delivery is the part of the fulfillment process where an order is sent from a warehouse directly to the customer. This part of the fulfillment process tends to be one of the most expensive. MFCs help to lower shipping costs and reduce delivery times because orders are fulfilled closer to customers, and automated fulfillment processes reduce labor costs.
Customer experience
The modern consumer expects rapid online order fulfillment times, and delayed delivery times can cause a decrease in customer loyalty and retention. With just about any item available online, retailers are now using ease and speed of delivery to differentiate from competitors, meet consumer demands and retain customers. For retail segments such as grocery, same-day delivery and curbside pickup have now become standard. MFCs’ focus on hyperlocal inventory requirements allows retailers to have products ready to ship the same day (or even the same hour).
Expansion opportunities
Since MFCs are smaller and cheaper to implement than typical warehouses and distribution centers, it may make it easier for retailers to expand their operations to new locations by implementing in existing retail locations or smaller storage centers. MFCs are particularly useful in densely populated areas, where storage space is costly, but demand for quickly delivered items is high. Automated storage systems in MFCs make the most of all available space, reducing the cost of product storage.
In addition to being cheaper than traditional warehouses, MFCs are also quicker to establish. A company can set up a small urban fulfillment center in just a few months, often utilizing previously existing retail spaces, while a traditional fulfillment center can take years to establish.