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Micro-fulfillment - the ‘Airbnb of logistics’

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Jon Walkington at Schoeller Allibert UK discusses how returnable transit packaging is responding to the growth in e-commerce.

The e-commerce market is booming – and it is growing fast. While the shift towards a digital shopping experience was present before COVID-19, new data from IBM has revealed that since the start of the pandemic, consumers have accelerated this trend by five years[1]. This is reflected in the latest research from Statista, which shows retail websites generated 22 billion global visits in June 2020, in comparison to just 16.07 billion six months earlier[2]. If the popularity of online retail continues on this trajectory, Statista forecasts that worldwide e-commerce sales will reach 22% (up from 14.1%) by 2023[3].

Closer to home, 38% of UK consumers are now purchasing goods online at least once per week – that’s according to a recent EPiServer study[4], which surveyed 4,500 consumers globally. In the height of lockdown, research from the Office for National Statistics (ONS) recorded 33.4% of consumers were spending online, in comparison to just 22% pre-lockdown[5]. Given the considerable increase in consumer spending, coupled with mounting pressure on supply chains and workers amidst the ongoing pandemic, how can businesses support this retail revolution? Perhaps it’s time we paid more attention to the last mile.

For retailers, this means understanding consumer behaviour better. With recent advances in technology, we now have access to a wide range of solutions that can facilitate last mile delivery. From real-time tracking systems to same-day delivery services, items can reach consumers quickly, but the convenience often comes at a higher cost. With more consumers willing to pay a premium price for a premium service, retailers that are using large distribution centres often fall short of expectations. This leads to reduced efficiency, transparency, and increased cost to the retailer due to a higher risk of damaged goods. Fortunately, for e-retail, there’s a better solution.

Micro-fulfillment – the ‘Airbnb of logistics’

Micro-fulfillment centres are compact warehouses often located in urban areas, perhaps in the backroom of a retail store. In fact, German courier DHL refers to them as the ‘Airbnb of logistics’. They represent a middle ground between the larger distribution centres and so-called dark store operations (e.g. large off-site centres primed for automation), supporting multiple retail stores in close proximity to deliver fast turnaround for online orders – a valuable asset in the current pandemic. By using a blend of artificial intelligence, including robotic arms to locate and pick up items, combined with analytical software, Enterprise Resource Planning (ERP) systems and inventory management solutions, micro-fulfilment centres utilise automation to reduce the cost of last mile delivery to retailers and can facilitate same-day delivery, with many able to fulfill orders in just one hour.

The US retailer Walmart, for example, has recently introduced the ‘Alphabot’ into its Salem, Massachusetts store to help streamline the order process and allow employees to perform their roles with greater speed and efficiency. Alphabot is seen as the company’s own take on micro-fulfillment – a merger of e-commerce and traditional brick and mortar methods[6]. In the UK, Ocado Retail has recently raised £1bn in new equity and debt to help finance the rollout of micro-fulfillment and smaller customer fulfillment centres (CFCs), following the news that one million UK consumers were now on its grocery service waitlist[7].

With this increase in micro-fulfillment warehouses at Walmart, Ocado and more, returnable transit packaging (RTP) must evolve to meet the needs of the growing e-commerce industry. This means RTP needs to be adaptable, versatile and robust to easily slot into a robotic arm or a manual worker, without the additional worry of external goods damage. In addition, it also needs to be recyclable and reusable, taking a ‘cradle-to-cradle’ approach, where product and packaging are developed together to eliminate waste completely. Many RTP producers are currently manufacturing their crates with this model in mind, but to simplify the process even further requires patience and a unique plastic engineering know-how.

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Delivering logistics efficiency, hygiene and sustainability

At Schoeller Allibert, we have designed and developed a range of products specifically for retailers, including the Maxinest Evo and Maxinest E-tail. The latter is an ideal solution for stores that are using micro-fulfillment centres, since it’s designed to deliver enhanced logistics efficiency, hygiene and sustainability for today’s challenged retail supply chains. For example, the E-tail crate can be combined with dividers so that retailers can store multiple customer orders separately in a single container. In addition, its nesting ratio is 80% so both return transportation costs and carbon footprint are reduced.

In comparison, the Evo range makes for a great solution for in-store display and home delivery, alongside click and collect services. During the height of the pandemic, making sure there was enough fresh produce on the shelves – whether virtual or physical – for consumers was challenging. Panic buyers and those just adding an extra one or two items into their basket meant that fresh produce shortages were happening on a weekly basis. By combining strength and extra ventilation for food preservation, food quality is unaffected and reduces costs associated with spoilage and waste, meaning consumers can have fresh produce for longer. Of course, fresh produce wasn’t the only type of product affected by supply chain complexities, frozen produce such as fruit and vegetables were also bought in large quantities. Fortunately, the Evo also allows quicker freezing of produce and is a valuable asset in today’s popular e-commerce grocery market.

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Whether retailers opt for the updated Maxinest Evo or new E-tail variants those deploying these solutions can rest assoured knowing these products have been researched, tested and tweaked at levels second to none to ensure they are optimised for manual and/or automated handling accordingly.  

RTP has a large role to play in the growth of online retail, home deliveries and more. RTP manufacturers must work together with e-tailers to support the demand now and in the future. If we’re able to reduce the complexity of automation and manual handling within the micro-fulfillment centre, we can increase the speed of delivery to the consumer. When empty and filled containers can be transported at the same time to optimise warehouse and vehicle fill, there are major cost benefits and environmental savings to both the retailer and the consumer. This forward thinking, however simple it may be, can strip those complexities and challenges from the retailer and place it in the hands of RTP manufacturers, where tailored solutions can be manufactured. So, while doing something for the first time is always the hardest, it’s going the last mile that counts!


[1] IBM, U.S Retail Index Annual Report, August 2020
[2] Statista, ‘Coronavirus impact on retail e-commerce website traffic worldwide as of June 2020’, accessed September 2020. https://www.statista.com/statistics/1112595/covid-19-impact-retail-e-commerce-site-traffic-global/
[3] Statista, ‘E-commerce share of total global retail sales from 2015 to 2023’, accessed September 2020. https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/
[4] Episerver, ‘Reimaginging Commerce Report 2020’, accessed September 2020. https://www.episerver.com/reports/reimagining-commerce-report
[6] Walmart, ‘How Walmart’s Alphabot is helping to revolutionise online grocery pickup and delivery’, January 2020. Accessed September 2020: https://corporate.walmart.com/newsroom/2020/01/08/how-walmarts-alphabot-is-helping-to-revolutionize-online-grocery-pickup-and-delivery
[7] Warehouse Automation Canada, ‘Ocado CEO points to micro-fulfillment and smaller CFCs’, July 2020. Accessed September 2020: https://www.warehouseautomation.ca/news-notes-1/2020/7/14/ocado-ceo-hints-at-micro-fulfillment-and-smaller-cfcs-mcgps

 

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