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LogisticsIQ Sees $36B Micro Fulfillment Opportunity

January 6, 2022

Micro Fulfillment Centers (MFCs), a highly recommended popular e-commerce fulfillment 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 or same-hour delivery. As per the latest market LogisticsIQ research study, Micro Fulfillment Market is expected to have a cumulative opportunity worth ~$36B in next 10 years by 2030 with an installed base of ~6600 MFCs if the technology and concept remains permanent. Year 2022 & 2023 are going to be the cornerstone for Micro Fulfillment market touching a billion-dollar mark and setting the base for the future.

The 3rd edition of this study is having a market analysis of more than 250 players (part of our exclusive Market Map), Key Technologies, Targeted Warehouse Sizes, End-User Industries, Store Types and more than 20 countries/regions although this market is getting adopted mainly in U.S. and U.K. at present. LogisticsIQ analysis is also validated through 50+ in-depth interviews across the value chain with components and technology providers, system integrators & manufacturers, grocery stores and end-user industry verticals.

Bob Bova, President and CEO at AccuSpeechMobile explained, "The growth in micro fulfillment centers is inevitable as consumers demand for fast delivery is now ingrained in their behaviors and expectations. The challenge is getting the workforce to populate all these new small facilities. Optimizing that workforce with edge based technologies like AccuSpeechMobile voice automation will provide the type of platform that requires fewer workers that become more productive."

HIGHLIGHTS OF MICRO FULFILLMENT MARKET STUDY

• Annual Micro-Fulfillment Center installations will grow more than 20x by 2030, from current installed base of ~50 in 2020 to be around ~6600 in 2030

• More than 80% of these micro fulfilment centers will be deployed in North America in 2022.

• Micro-Fulfillment Market is supposed to grow with 10X by 2025 and 30X by 2030 as compared to current market of 2021. MFC Services itself will contribute more than $1.6 Billion by 2030 in this emerging space.

• Almost 65% installation are supposed to be deployed with Shuttle-Based and Cube-Storage technologies in 2030 led by AutoStore and Takeoff Technologies. Players like Geek Plus and Hai Robotics have also entered in this market through their AMR based solutions to give a tough competition to traditional players.

• It is expected to have more than $6B market revenue of Micro-Fulfillment automation from Grocery Omnichannel (Walmart, Kroger, Ocado, Tesco, Albertsons, Meijer, Ahold Delhaize, Target, Carrefour) and Pure-Play E-commerce/Q-commerce players (Amazon, Gopuff, Instacart, Grofers, Missfresh, Dingdong) players only by 2030.

LogisticsIQ forecasted ~1000 MFC installation for In-store deployment and ~380 installation for dark stores in 2030 although there can be some installation within existing or new DC/FC as well.

• More than 50% of such MFC installations are supposed to be targeted for warehouses having a size of between 5000 sq. ft. and 25,000 sq. ft. as LogisticsIQ is expecting a good growth for less than 5000 sq. ft. segment due to new dark stores opened by ultrafast delivery players

• It is not a sustainable or profitable business for delivery service providers like Getir, Grofers, GoPuff, Instacart, Uber, Jokr, Fridge No More, Gorillas, Buyk, Delivery Hero, Swiggy, Zapp, Rappi, DoorDash, Weezy, Picnic, Jiffy, Shipt, Deliveroo, 1520, Dijas, Caviar, Rakuten, Flink, Justo, BevMo etc. to fulfil and deliver the order manually although they can expect advertisement revenue from FMCG players.

• Delivery service providers may partner with retailers or may have their own dark stores to automate the fulfilment process. Gopuff itself is having more than 500 dark stores and it reflects the huge opportunity of automation in this new customer base.

• USA is going to be main market for next 10 years followed by U.K., Japan, France and China. LogisticsIQ expects around 3400 MFC installed base i.e., more than 50% of worldwide market within USA by 2030.

MICRO FULFILLMENT – NEED OF THE HOUR

Industry giants such as Amazon, Walmart, Ocado, Kroger and Alibaba are driving the “best-in-class” e-commerce fulfillment strategy for the last decade. They are also investing in cutting-edge robotics and automation for their Customer Fulfillment Centers (CFCs) – that are continuously redefining target productivity and service levels. But these centralized fulfillment centers 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-fulfillment 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 like

• The cost of storage, retrieval and picking (through automated MFC)

• The cost of the last mile delivery (through hyperlocal placement)

• The cost of real estate (through condensing fulfillment centers down into MFCs)

That’s why, Micro Fulfillment Center (MFC) is a perfect solution for urban warehouses with an approximated size between 5000 SF and 25000 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, dark stores, 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 options 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 in the long term.

• Key to make online grocery business more profitable as compared to current scenario of either net loss or thin profit margin

MICRO FULFILLMENT MARKET TRENDS

Micro Fulfillment Market has been the most important and emerging trend during pandemic (covid-19) coming out from some bigger trends like eGrocery Growth, Urban Warehouses, Dark Stores and Automated Cold Storages. Huge investment in start-ups like Takeoff Technologies ($86M+), Fabric ($336M+), 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, GAP, Nike, Woolworths, Amazon, Ocado, Carrefour, Uniqlo, Meijer, H-E-B, Albertsons, Majid-Al-Futtaim, Decathlon, Nordstorm, H-Mart and Ahold Delhaize have already started adopting and implementing these new technologies during pandemic. Apart this, piece picking robots’ suppliers like Berkshire Grey, Righthand Robotics, Kindred AI, Covariant, OSARO, Plus One Robotics, XYZ Robotics, Fizyr have established a new attractive capability for order picking in ecommerce fulfillment to transfer the good-to-person (G2P) systems into good-to-robot (G2R) systems.

Coming to MFC system architecture and technologies, AutoStore is an old and proven technology with hundreds of installations in ecommerce fulfullment including the recent partnership with Swisslog and H-E-B for micro fulfillment center 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, Berkshire Grey, Geek Plus and Alert Innovation. Established system integrators like Dematic, TGW, SSI-Schaefer, Daifuku, Honeywell Intelligrated, Vanderlande and Knapp are using the traditional shuttle and ASRS systems which are good and already proven for big fulfillment centers but not 100% ideal for micro fulfillment 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. Apart this, software is going to be the main differentiator and value add for MFC systems as some suppliers are having their in-house software capabilities and others are having a partnership to do the needful.

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