Micro-fulfillment reduces carbon emissions by placing warehousing and delivery operations closer to final-mile destinations, says Julien Seret, vice president of network supply chain at Attabotics.
Amazon may have started with delivery taking as long as five days, but over time it has made same- and next-day delivery table stakes, Seret says. And multiple surveys by brands, retailers and market research companies show that retailers could boost revenue by more than 30% if they were to offer same-day delivery. “So the trend is massive.”
Why not simply work with Amazon? Seret says some brands are unwilling to share their data with the e-commerce giant. “They don’t want to see a copy of their product on Amazon.” If they have brick-and-mortar stores of their own, they could opt to ship from them, but there are problems with that.
“A store is not organized to fulfill e-commerce orders,” he says. “It's highly inefficient to put goods on retail store shelves and then pick orders from there. It creates a lot of disruptions. And most importantly, you don't achieve the right level of economics with that. If you ship from one store, you're not able to optimize delivery, which is most important in terms of cost impact. So the only option that remains is to engage in micro-fulfillment, which brings inventory to where you need to deliver your order. It's absolutely indispensable if you can't deliver your order same day.”
Companies must position their inventory “in the middle of demand” to optimize delivery and reduce cost. However, a single brand can’t have a hundred micro-fulfillment centers nationwide, so sellers must explore sharing multi-tenancy infrastructure.
Seret says studies show that multi-tenant micro-fulfillment initiatives can lower the cost of last-mile delivery by $3 or so. “That’s totally a game changer.”
Timely, incisive articles delivered directly to your inbox.