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Micro-fulfillment Centers Only Half of the Equation

DC Velocity recently ran an article on the growing trend of micro-fulfillment (placing popular products in small fulfillment centers centrally located within population centers), noting the value of the approach as a response to e-commerce growth, warehousing shortages and carrier capacity constraints.

“If industrial real estate were widely available in key markets, perhaps that would put a damper on the popularity of micro-fulfillment. But warehouse vacancy remains at record lows, while industrial real estate demand remains at all-time highs. As a result, even conservative estimates place any sort of balance of supply and demand in warehousing about two years out. This factor should give micro-fulfillment plenty of time to normalize itself in fulfillment networks.

Research and Markets estimate that micro-fulfillment center installations will grow more than 20 times by 2030, with more than 80% of those installations deployed in North America. This data suggests that micro-fulfillment will become a staple of e-commerce fulfillment practices within the next few years.”

Among the benefits cited are faster shipping and lower transportation costs. But these are only true if retailers have the necessary tools to capitalize, including:

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The benefits of micro-fulfillment are negated if retailers’ carrier networks lack the capacity to handle the increased shipment volume or are locked into single carriers with increasing prices. If retailers lack the ability to quickly analyze fulfillment data from every angle, they’re leaving money on the table by not understanding how and where to optimize their processes, including carrier and service selection.

The critical nature of last-mile delivery for customer satisfaction heightens both the opportunity and risk for retailers employing micro-fulfillment. Contact us today to see how we can help you optimize your micro-fulfillment capabilities.