Recent studies predict MFCs in the grocery industry represent a cumulative opportunity worth $10B by 2026. Out-of-the-box MFC solutions are increasingly becoming available to support end-to-end scenarios, including curbside.
However, MFCs are eroding some bottom lines because of sub-optimal processes. While they may be able to fulfill customer expectations, there are areas where MFCs are further complicating the operation.
In this article, we’ll discuss the state of grocery MFCs, the current complications with fulfillment methods using MFCs, and solutions to increase bottom lines for the growing MFC market.
The Rise of Grocery Micro Fulfillment Centers
What is a grocery Micro Fulfillment Center (MFC)?
A micro fulfillment center is a small, automated facility often connected to a pre-existing retail grocery store or warehouse that supplies e-commerce delivery orders and pickups through automation.
MFCs help decrease costs for last-mile deliveries by locating the entire fulfillment process (order receipt, picking, packing and delivery) closer to the end user.
The MFC’s inventory is separate from the inventory of the retail floor, creating a different and more efficient process for online ordering.
Micro fulfillment vs. dark stores
Micro fulfillment centers and “dark stores” are both autonomous fulfillment warehouses used exclusively to fulfill online orders. The terms are often used interchangeably, but MFC is more often used to describe an autonomous warehouse connected to a brick-and-mortar grocery location, whereas a “dark store” is more often used to describe a totally separate location from any in-store shopping. Dark stores and MFCs are used by grocery retailers as well as restaurant chains and other retail stores.
Why are grocery MFCs on the rise?
The promise of MFCs became apparent after the COVID-19 pandemic increased demand for online grocery shopping and delivery. While most grocery stores use the retail floor as a space for in-store shopping and online order fulfillment, retail store floors are simply not designed to work as a fulfillment center. MFC’s make the e-commerce process faster for customers and more efficient overall.
Today, the effect of the COVID-19 pandemic remains one of the key accelerators for the prosperity of the grocery segment within e-commerce. MFCs are expected to grow at a CAGR of 60% at a global level, while North America still has the highest concentration.
To fuel this further, it is predicted that grocery will be the main contributor to the MFC market with a 70-80% market share.