You may have seen news articles proclaiming that automated micro-fulfillment centers or MFCs are the "wave of the future" for online retailers. And while it's true that these centers can offer a number of benefits in terms of efficiency and cost-savings, the fact of the matter is that they're only really viable for large companies with deep pockets.
Here's a look at why that is and why smaller retailers will need to wait a while longer before they can take advantage of this technology.
The High Cost of Implementation
Perhaps the biggest barrier to entry for automated micro-fulfillment centers is the cost of implementation. These centers require significant investments in both capital and labor in order to get up and running—something that many small and medium-sized businesses simply can't afford.
To put it in perspective, a recent study found that the median cost of implementing an automated micro-fulfillment center is around $7 million. And that's just for the center itself—it doesn't include the costs of integrating it with your existing fulfillment infrastructure or training your employees on how to use it. For many small businesses, those costs are simply too high to justify.
The Requirement for High Volume
Another reason why automated micro-fulfillment centers are only really viable for large companies is that they require high volumes of orders to be truly effective. That might not be a problem for a company like Amazon, which ships millions of orders per day, but it could be a major issue for a smaller retailer fulfilling hundreds or even thousands of orders per day.
The reason for this is simple: these centers rely on robots to pick and pack orders, and those robots need time to do their job. If you're fulfilling a high volume of orders, you can keep the robots busy and running at full capacity. But if your volume is lower, those robots will spend more time sitting idle—and that defeats the purpose of having an automated micro-fulfillment center in the first place.
Automated micro-fulfillment centers have the potential to revolutionize online retail—but only for large companies with deep pockets and high volumes of orders. For small businesses, these centers are simply too expensive and impractical to justify right now. So while they may be the wave of the future, we'll just have to wait a little while longer before they become mainstream.
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