Amazon’s announcement earlier this year of plans to roll out free one-day shipping to all its Prime members sent shockwaves through the e-commerce industry. Suddenly, brick-and-mortar giants like Walmart and Target, which had already made significant investments in their online sales and logistics operations to match Amazon’s two-day delivery benchmark, were once again lagging behind.
The online retailing giant’s seemingly audacious promise wasn’t made on a whim, however. In fact, at the time of the announcement, Amazon was already capable of offering same-day and next-day delivery to 72% of the total U.S. population—or about 237 million people—due to its massive network of fulfillment centers located in many of the wealthiest and most populated states in the country.
Amazon’s ability to rapidly expand its fulfillment network highlights an important trend in the storage and retrieval of e-commerce goods: micro-warehousing.
Small Yet Mighty
Micro-warehousing, or micro-fulfillment, is the practice of placing small, often automated distribution centers near densely-packed metropolitan areas where square footage is both extremely expensive and hard to come by. These miniature hubs are often located in non-traditional warehouse spaces, such as vacant department stores or manufacturing facilities, and are stocked with the most popular items bought by consumers in the area. Some retailers are ever creating “pop-up” distribution centers by moving into temporary spaces to meet increased demand during peak seasons.
And because these micro-warehouses are usually in geographic areas where commercial real estate is expensive and low-wage labor is nearly non-existent, many companies are looking for the efficiencies offered by robotics and automation systems when converting these spaces to their new roles as distribution centers.
Traditional fulfillment warehouses are designed and built to accommodate fixed automated storage and retrieval systems (AS/RS), which are large vertical carousels or lattices where goods are stored. A system of automatic shuttles and conveyors move those goods to a picking station. Because such systems are expensive to implement and require a tremendous amount of dedicated space, they are not an option for micro-warehouses.
Robots to the Rescue
Autonomous mobile robots (AMRs), on the other hand, are specifically designed to be more cost-effective and to operate in most any warehouse environment. This helps alleviate the constraints of high real estate costs, low unemployment rates, and infrastructure issues that have been barriers to automating.
Using AMRs optimizes repetitive tasks like stock picking and replenishment so that labor expenditures can be reallocated toward higher rents. The automation of order fulfillment in warehouses also helps e-commerce companies realize other savings, including spending less time and fewer resources on quality control due to increased picking accuracy and vastly improved inventory management. When locating distribution centers in costly urban areas, it becomes even more essential to eliminate any waste or costs in the process.
One of the challenges of deploying traditional automation systems was that spaces needed a complete retrofit, including resurfacing floors and purchasing expensive, bespoke shelving systems. This new generation of warehouse robotics can be slotted right into existing infrastructure and can be configured to run a handful of picking robots or a large fleet depending on your needs. Deployments can be scaled up or down quickly as order volumes ebb and flow or as you modify your distribution network configuration.
Another added bonus: AMRs can be moved easily from one location to another, allowing you to expand your distribution network regionally or move it across the country with little to no downtime.
Why Does It Matter?
One-day delivery is now the new normal, and any online retailer who doesn’t take steps to assure its customers have the option of receiving their orders via same-day or next-day delivery risks getting left in the dust.
Micro-warehouses using robotics and automation systems offer companies a way to quickly turn vacant spaces in big cities into distribution centers without committing to costly infrastructure changes. They also help to alleviate last-mile delivery issues, which are among the industry’s biggest pain points.