Post-COVID Shopping Habits Increase Number of Micro-Fulfillment Centers Around the Country

With increasing demands for quick and secure delivery of products from online consumers, many companies and retailers have turned to a new strategy of setting up remote warehouses in highly populated areas around the country.   

The buzzword that best describes this strategy is micro-fulfillment, and the expectation of companies implementing this approach is that having small warehouses selectively placed closer to the end consumer will reduce overhead costs, improve customer satisfaction, and ultimately lead to a higher return on investment. 

These compact, typically automated warehouses are designed to store a high volume of goods within high-traffic areas. Sometimes called MFCs (micro-fulfillment centers), they significantly cut delivery time by placing the product hours (sometimes minutes) away from the buyer rather than days. 

With the notable rise in e-commerce amidst the pandemic, MFCs have become a popular business tactic, and they’re still gaining traction. 

A major cause of the growing popularity of micro-fulfillment is the benefits it offers to consumers and business owners alike. 

Instant Gratification 

Most of us are wired toward instant gratification simply due to human nature. However, with the advent of technology and the speed with which we do everything from communicating to conducting business transactions, the demand for immediacy feels like it took a steroid shot. Add to this evolution the shutdowns and “stay at home” orders we experienced during the pandemic, and suddenly people are more comfortable than ever shopping from the privacy of their own homes. According to one source, “Walmart saw its e-commerce sales boom in the third quarter of 2020, up 79% compared to store growth of 6.4%.”

Consumer expectations are undoubtedly fueled by the digitization of a formerly brick and mortar world. We no longer stroll aisles or stop for a Cinnabon on the way from one random kiosk vendor to another. Today, we shop by clicking buttons. E-groceries, online clothing stores, and companies like Amazon are making it infinitely harder for retailers in the digital age to bring customers into their stores. 

However, even retail giants like Amazon are finding it challenging to meet customers’ growing demands for quicker, cheaper delivery. In other words, the instant gratification mindset has morphed into an unrealistic desire for immediate results. 

As best practices require though, businesses dare not tell their customers that they cannot meet those expectations. That’s a sure-fire way to lose a sale. Instead, MFCs address this concern and improve customer satisfaction, which leads to increases in profits. 

Reduced Shipping Costs

Another legitimate factor in customer retention is affordable delivery. 

Today, most customers have an expectation of free or close to free delivery. They resent watching the price for an item balloon on their screen as the taxes and the service and delivery fees get added to the subtotal. Suddenly, the $39.99 lamp they purchased is now $67.93. By setting up micro-fulfillment centers, businesses ensure their products are considerably closer to their endpoint, which means quick and cheap delivery is feasible. Their location equals a substantial reduction of transportation cost. 

Furthermore, since they’re placed in highly populated areas, many micro-fulfillment centers offer curbside pick-up options. Equipped with automated warehouse management systems, their robots can quickly and accurately pick, sort, and even package orders almost instantaneously. 

Space Utilization

Micro-fulfillment centers are curiously named. While they’re not designed to compete with those warehouses that look like airplane hangars, they contain far more products than a brick-and-mortar store could. This is another economical advantage. 

Designed for automation, MFCs offer high storage density that’s more modular and optimized. There’s no concern about an attractive interior design, seating arrangements, or planning aisle space for the optimal flow of roaming shoppers. An MFC can occupy less square footage while simultaneously doubling or tripling the amount of product you can house. This substantially boosts the value of your real estate.

Micro-Fulfillment is Here to Stay

It’s evident that micro-fulfillment is a wise investment for retailers hoping to meet the demands of online consumers and improve on their storage space and services. 

Since efficient delivery is one of the most crucial factors in customer retention, MFCs are rapidly increasing, and there’s no sign of them slowing down. In fact, large competitors like Walmart and Kmart have adopted the small, automated warehouse approach that Amazon and Target use, and they’re beginning to reestablish themselves in the process. 

Should you or anyone you know be seeking help in establishing a micro-fulfillment center, or if you’re looking for a new warehouse management system that uses automation to improve customer service, reduce overhead, and increase the speed of delivery, Quintec Integration is here to help.

Reach out to a member of our sales team, today, to receive the best options and solutions for your every material handling, supply chain, or warehouse automation needs.