Micro fulfilment centres (MFCs), a highly recommended, popular e-commerce strategy, is an effective way to meet the rising volumes, the changing geographical nature of e-commerce demand and the growing desire for same-day delivery. Per LogisticsIQ’s latest market research study, the micro fulfilment market is expected to have a cumulative opportunity worth ~$10B in next 6 years by 2026 with an installed base of ~2000 MFCs if the technology and concept remain permanent. Year 2022 is going to be the cornerstone for Micro Fulfilment market touching a billion-dollar mark and setting the base for the future. It is expected that there will be one micro Fulfilment centre for every 10th of U.S. total 40,000 grocery stores by 2030. 

Micro fulfilment: need of the hour

Industry giants such as Amazon, Walmart, Ocado, Kroger and Alibaba are driving the ‘best in class’ e-commerce Fulfilment strategy for the last decade. They are also investing in cutting-edge robotics and automation for their Customer Fulfilment Centers (CFCs) – that are continuously redefining target productivity and service levels. But these centralised fulfilment centres are situated far away from the city and have an additional transportation cost along with considerably more delivery time as compared to consumer’s expectations, especially in grocery and F&B industry. Online grocery is already having a slim profit margin and micro-Fulfilment has the ability to increase its margin and to make e-commerce accessible to a broader range of retailers because it cuts down major costs.

That’s why micro fulfilment centers are a perfect solution for urban warehouses with an approximated size between 5,000 SF and 25,000 SF that can meet the requirement of same day delivery through in-store picking or multiple last-mile delivery options. It can even be deployed at backside of the retail store, malls or basements. A typical MFC system is having 1-2 aisles dry + 1-2 aisles chilled, 5,000-8,000 totes 10-high storage to 24’ x 2-deep, 2 decanting stations and 2-4 pick stations with each station picking at 700-800 UPH.

Top Factors

  • It is estimated that online grocery will contribute more
    than 10% of overall grocery sale in US by 2025
  • It is expected that consumers will continue with habit
    of buying online grocery developed during pandemic
  • Delivery option may vary as home delivery, in-store
    pick up, curb side pickup, locker delivery etc.
  • Urban warehouses with automation will be key to meet
    this demand with same day delivery expectations
  • Delivery fee is the one of the key factors to decide
    the digital channel

Micro fulfilment market trends

Micro Fulfilment Market has been the most important and emerging trend during pandemic (covid-19) coming out from some bigger trends like eGrocery Growth, Urban Warehouses and Automated Cold Storages. Huge investment in start-ups like Takeoff Technologies ($86M+), Fabric ($136M+), Attabotics ($82M+), Exotec Solutions ($111M+) and Alert Innovation are witnessing this growth along with presence of existing traditional players like Dematic, Swisslog, Knapp, OPEX Corporation, Muratec, AutoStore, Honeywell Intelligrated and Vanderlande. Retailers such as Walmart, Amazon, Kroger, Woolworths, Amazon, Ocado, Carrefour, Uniqlo, Meijer, H-E-B, Albertsons, Majid Al Futtaim and Ahold Delhaize have already started adopting and implementing these new technologies during the pandemic.  

Per this market study, the micro fulfilment market is expected to grow with a CAGR of ~60% between 2020 and 2026 with a maximum market share from U.S. Recently developments have been started in Europe and APAC as well for countries like U.K., France, Japan and Australia. Even there are some order intake in UAE, Saudi Arabia and Israel from middle east region as well. Grocery is going to be the main contributor for this market with 70%-80% market share although general merchandise and other industries are also going to adopt the market very soon.

Coming to MFC system architecture and technologies, AutoStore is an old and proven technology with hundreds of installations in e-commerce fulfilment including the recent partnership with Swisslog and H-E-B for micro Fulfilment centre in U.S. but they are going to face a very good competition in MFC space from new players like Takeoff Technologies, Fabric, Exotec Solutions, Attabotics and Alert Innovation. Established system integrators like Dematic, Honeywell Intelligrated, Vanderlande and Knapp are using the traditional shuttle and ASRS systems which are good and already proven for big Fulfilment centres but not 100% ideal for micro Fulfilment yet. At the same time, Attabotics, Alert Innovation, and Exotec are using emerging 3D technologies having good architecture specific to MFC with high density and no point of failure but it will too early to say anything as there are only few installations and not 100% proved yet.

LogisticsIQ