Why Amazon should be concerned about Walmart’s micro-fulfillment centers

In a parking lot under a skyscraper in the heart of Tel Aviv, robot order fulfillment company Fabric is demonstrating the kind of technology that should worry Amazon executives.

While Amazon’s logistics strength is seen as an unbeatable advantage, the automated mini-distribution centers Fabric and other tech vendors are installing in Walmart stores and U.S. supermarkets could be the Trojans breaking through the defenses. of the e-commerce empire.

In Tel Aviv’s 15,000 square foot space, six employees, aided by dozens of robotic bins that run from station to station, fill grocery orders for one of the world’s largest chains. supermarkets in Israel. The site typically fills 300 orders per day, with each order averaging 50 items, and has the capacity to fill much more than that.

At the Tel Aviv site, Fabric is showing retailers that it can set up a micro-distribution center almost anywhere, even in an underground parking lot, and make it work.

Now Walmart is preparing to use this technology to turn its stores into an even greater competitive advantage over Amazon.

Amazon doesn’t just have to worry about Walmart. Major U.S. supermarket operators are also preparing to quickly add automated in-store distribution centers. Other big box retailers should follow Walmart’s lead.

“This is a trend that is not going to go away,” said Randy Mercer, global product manager at 1WorldSync, a provider of product content for brands and e-commerce retailers. The pandemic has caused retailers to turn their stores into mini-distribution centers, using manual picking. Now Walmart is taking the lead in adding technology, he said,

“I guarantee you the others are right behind – the Targets, the Krogers,” Mercer said. Retailers have started to automate their warehouses and distribution centers, so it’s inevitable that they’ll be thinking about how to do the same in their stores, on a smaller scale, he said.

Fabric is one of three robotics companies that Walmart is partnering with to build automated distribution centers in its stores. Walmart, when it announced the deals in a blog post last month, said dozens of local fulfillment centers were in the works, with more to come.

John Furner, president and CEO of Walmart in the United States, during Walmart’s earnings call on Feb. 18, said the retailer expects to have more than 100 local distribution centers in operation “in over the next two years ”.

In addition to Fabric, Walmart is also partnering with technology companies Dematic and Alert Innovation to build these distribution centers.

Alert Innovation created the Alphabot automated sampling system. Walmart began testing in late 2019 at a supercentre in Salem, New Hampshire. This test site put Walmart ahead of its competition when the pandemic hit and allowed it to fill online grocery orders in the Salem area, while other online grocery services had delays of Several weeks.

Walmart and its three technology partners are not revealing how many centers each robotics company will build, or where they will be located. But videos Walmart posted to the Alphabot system in Salem and a virtual tour of the Fabric site in Tel Aviv show why the rapid growth of in-store fulfillment centers should worry Amazon executives.

Fabric’s model uses two types of robots: rack robots that can fetch from the thousands of products stacked in the distribution center, and floor or hold-all robots that can move freely around the center to deliver goods. at packing stations managed by employees.

At the Tel Aviv site, all grocery orders are prepared for delivery and delivery drivers pick up completed orders. But the model could also be used for click-and-collect orders in-store, or curbside, or placed in vending machine-type storage lockers for customer pickup.

Steve Hornyak, chief commercial officer of Fabric, declined to comment on the Walmart project, but spoke of the potential Fabric sees for automated in-store fulfillment to transform e-commerce.

With manual picking, Hornyak said, grocery stores are typically limited to around 100 orders per day. Textile robotics can increase this capacity five to 10 times, up to 1,000 orders per day, in a space that can be as small as 10,000 square feet, carved out of existing store space.

Fabric recently activated a non-grocery general merchandise micro-distribution center in Brooklyn, New York, which is currently used by two brands, one health and beauty and one apparel. Fabric expects three to four brands to use the center soon.

General merchandise centers provide a way for brands to place fulfillment near their customers, without having to use Amazon warehouses.

“If you want to maintain control of your brand and be as close to your customers as possible, Fabric is an option to deliver your products there same or next day” without having to share customer information or data with Amazon or other markets. , says Hornyak. “A lot of brands are looking for this,” he said.

Fabric has ongoing fulfillment sites in New York, Dallas, Washington DC and Los Angeles that are expected to be operational this year, as well as additional sites in Israel.

Fabric, which was previously called CommonSense Robotics, will sell the robots, hardware, and software to a retailer, or operate the hub for the retailer for a fee, in a robots-as-a-service model.

Grocers are increasingly turning to the robot-as-a-service model. Hornyak said. “This model gives them a known and constant operating expense.”

Ten days ago, Furner and Walmart, Inc. CEO Doug McMillon spent a lot of time in the fourth quarter talking about automation and new fulfillment centers.

“If we find that it works great and we can go faster, I’m going to be in the camp of wanting to go faster because it seems to be really great for our supply chain, great for customers, great for l ‘business,’ McMillon said.

An automated micro-fulfillment center installed in a Walmart store can be stocked with the most popular grocery items and general merchandise orders for online orders. Robots can quickly choose these items, and store workers can add anything sold in the store to an order – a television, toaster, sweatshirt – to pick up with groceries.

McMillon explained how Walmart made a deliberate choice years ago to focus, in the US market, on in-store pickup for online orders rather than delivery. This choice paid off during the pandemic, as Walmart’s investments helped it manage the surge in online orders.

“In the United States, we thought, depending on the size of the country and the way people like to drive their cars – they do drive-ins for food and banks and everything – that we had the opportunity to really focus on the pickup for a few. years, which was obviously economically advantageous for us.

In-store distribution centers built by Fabric and other technology providers give Walmart the ability to use existing store and parking space to create drive-thru pickup stations for online orders that can be fulfilled the same time, not just the same day. And that must worry Amazon.


Source link

About Kristina McManus

Kristina McManus

Check Also

“Bad credit okay! »How To Avoid Being A Victim Of Fraudulent Loans

Beware of loan companies that will steal your money and personal information. Beware of advertisements …

Leave a Reply

Your email address will not be published. Required fields are marked *