Online sales have been growing rapidly since 2020, but this also brings new challenges for retailers. While e-commerce can increase total revenue, the costs of picking up and delivering orders can reduce profit margins. According to Gray Berkshire , retailers who rely solely on manual labor can lose $7 per order with curbside pickup and $13 per order with delivery included. However, microfulfillment centers can use automation to reduce fulfillment cost and picking time.
The following are some companies that are emerging as leaders in warehouse automation and microfulfillment in the US market.
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Wal-Mart
The world's largest retailer has begun deploying microfulfillment technology with several partners, including Alert Innovation. According to Progressive Grocery , Walmart announced in January 2021 that it would install more than 100 MFCs in the near term. Many of these MFCs will be deployed in existing stores and others will utilize new locations that will be dedicated exclusively to fulfilling e-commerce orders.
- According to Digital Commerce 360, Walmart's online sales increased 79% in fiscal year 2020.
- The retail giant invested $10.3 billion in automation and other supply chain improvements in 2020, and plans to invest $14 billion by the end of 2021.
Ahold Delhaize
Ahold Delhaize created Peapod Digital Labs, an e-commerce business engine for the food industry. The company is collaborating with The Giant Company to deploy an MFC in Philadelphia that will deliver 15,000 online orders per week. The project will utilize Swisslog's SynQ software, a storage and retrieval system from Autostore, and manual collection technology developed in-house by Peapod Digital Labs.
- 2020 was a very successful year for Ahold Delhaize with a 67.4% growth in online sales worldwide and a remarkable 105.1% growth in the US market.
- Considering all retail segments, the company's net sales increased 14.2% globally in 2020.
Swisslog
Swisslog is a provider of logistics automation solutions for distribution centers and warehouses, and the company has focused on expanding its operations in the US. Since September 2020, the company has been working with HEB to deploy MFC technology, which will help the supermarket chain fulfill its online orders more efficiently – this includes curbside pickup and delivery. Additionally, SynQ software is being used by Ahold Delhaize for a microfulfillment center in Philadelphia, as mentioned above. Swisslog is also in talks with 20 to 30 smaller retailers, according to Progressive Grocer.
At the ProMatDX 2021 Supply Chain Conference Swisslog gave users the opportunity to choose gifts and they were able to see a live stream of gifts being chosen using the company's micro-fulfillment technology.
- As a supplier and integrator of warehouse automation solutions, Swisslog has annual sales of €3.2 billion ($3.89 billion).
- Swisslog has completed more than 2,000 installations worldwide and is the largest Autostore integrator, having installed more than 170 of its designs.
The Kroger Company
The Kroger Company has been working on a “macro-fulfillment” strategy: using warehouse automation while maintaining the large scale of a traditional distribution center. While typical MFCs typically use space of less than 10,000 square feet, Kroger is planning to deploy automated distribution centers of up to 375,000 square feet. The first of these customer service centers began operating in Cincinnati in April 2021 and nine more are planned.
- Kroger has partnered with Ocado, a leading UK e-grocer, to learn from its experience with online order fulfillment.
- Kroger saw its online sales increase 79% in 2020, as did Walmart, and was listed among the Top 10 US eCommerce Companies in 2021 by eMarketer.
Instacart
Instacart started as an order pickup and delivery company in June 2012 and is now expanding its services to include microfulfillment.
- Demand for grocery delivery services increased in 2020, largely due to the COVID-19 pandemic, and this helped Instacart expand its business.
- The company is now valued at US$17.7 billion, which represents a 124% increase from the US$7.9 billion recorded in just one year, and secured US$200 million in its last round of financing.
According to the Financial Times, Instacart is already in talks with technology providers like Alert Innovation and Fabric, with plans to deploy 50 microfulfillment centers across the US.
