Hyper-local order fulfillment - the future of grocery e-commerce
The grocery industry is undergoing a major transformation driven by hyper-local order fulfillment centers, also known as nano-fulfillment centers. These centers are small, automated facilities designed to meet the rising demands of urban e-grocery shoppers. Let's explore how these innovations are reshaping the future of grocery logistics.
The Vision for a new logistics platform
The grocery industry lacks a comprehensive logistics platform tailored to online orders and in-store pickups. According to Brittain Ladd, such a platform should integrate technology, software, fulfillment, and delivery based on customer needs. The key is to move beyond current delivery methods, often reliant on gig workers, to specialized vehicles designed for grocery delivery, like the Zevo 600. These vehicles could transport multiple specially designed containers for different temperature-sensitive products, enhancing efficiency and reliability.
"The missing ingredient of the grocery industry is that no one has truly created a Logistics Platform for groceries." — Brittain Ladd
Efficiency of micro fulfillment centers (MFCs)
Micro Fulfillment Centers (MFCs) are small, automated warehouses located in urban areas, significantly reducing delivery times and costs. According to MWPVL International, MFCs can pick between 350 and 500 items per hour, a stark contrast to the 75 seconds it typically takes a human worker to pick a single item. These centers become financially viable after handling around one million orders, which can take years to achieve.
"A typical MFC can pick between 350 and 500 items per hour and takes from 7 to 10 seconds to gather each product... By contrast, human workers in a store generally take about 75 seconds to pick a single item." — Brittain Ladd
The promise of nano-fulfillment centers
Nano-fulfillment centers offer a solution to the high delivery costs that plague small businesses. These ultra-local centers reduce transportation costs, making it feasible for small businesses to offer competitive delivery options. Deloitte highlights the importance of hyper-local fulfillment for reducing traffic and CO2 emissions in cities.
"Stored in urban areas, the small, automated warehouses optimize the last-mile delivery process by distributing inventories and fulfillment capabilities closer to the end consumer, reducing the distance products need to travel and decreasing the time and costs associated with delivery." — Deloitte
Market trends and statistics
The rise of e-commerce has significantly impacted the grocery sector. GM estimates that by 2025, the combined market opportunity for parcel, food delivery, and reverse logistics in the U.S. will exceed $850 billion. According to the World Economic Forum, urban last-mile delivery demand is expected to grow by 78% by 2030, leading to a 36% increase in delivery vehicles in the world’s top 100 cities.
"GM estimates that by 2025, the combined market opportunity for parcel, food delivery, and reverse logistics in the U.S. will be over $850 billion." — Brittain Ladd
Financial considerations
Nano-fulfillment centers can significantly reduce the cost structure for online grocery fulfillment. Picking labor costs and last-mile delivery are major cost drivers, often totaling $8 each on a $100 online grocery basket. By optimizing these processes through automation and proximity, nano-fulfillment centers can make online grocery orders more profitable.
"On a $100 online grocery basket, manual-picking labor costs and associated overheads would typically amount to about $8, with the cost of last-mile delivery to the customer amounting to another $8." — McKinsey
Future of fully robotic fulfillment
The future of grocery fulfillment lies in the widespread adoption of fully robotic fulfillment centers. As labor costs rise and robotic costs decrease, these centers will replace traditional stores, offering faster and more efficient service. This shift will enable retailers to meet the increasing demand for same-day delivery and enhance customer satisfaction.
"In the future, every neighborhood, in every suburb and city, will host robotic fulfillment locations, essentially replacing the stores of yesterday." — Brittain Ladd
Conclusion
Botshare is poised to lead this transformation, leveraging advanced robotics and AI to develop hyper-local fulfillment centers that meet the demands of modern consumers. By adopting these innovations, grocery retailers can enhance efficiency, reduce costs, and deliver superior service.
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