What Is A Micro Fulfillment Center? Cost, Benefits & More

Jamie Jacobs
Jamie Jacobs joined APX Construction Group in June of 2020 specializing in interior design, marketing, event planning, and business development.
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  • The day when your e-commerce business starts to outgrow your garage is an exciting but stressful day. When you’re used to running a small business out of your home, you may not know where to turn next when your sales start taking off.

    Most e-commerce businesses turn to fulfillment centers to handle the packaging and shipping of all their orders. But there’s a specific type of fulfillment center out there that could be the perfect solution for your business: a micro fulfillment center (MFC). Let’s take a closer look!

    What Is a Micro Fulfillment Center?

    Micro-fulfillment is a strategy used by e-commerce businesses that involves placing smaller warehouses in densely populated urban areas closer to a large portion of consumers. Moving the fulfillment as close to the consumer as possible helps small businesses stay competitive with the big-league players.

    A micro fulfillment center is a small fulfillment center that is often highly automated. The warehouse space is usually 3,000 to 10,000 square feet and is located close to highly-populated areas. Due to their smaller size, these warehouses can only house about 1 to 2 days of inventory, and they require frequent restocking.

    micro fulfillment center orange garage doors

    MFCs can be:

    • Located within existing warehouses
    • Placed within a retail storefront
    • Built new in an ideal area

    Traditional Warehousing vs. Micro Fulfillment Centers

    So far, you might be wondering what the difference is between MFCs and traditional larger distribution centers. Let’s take a look at some key facts:

    Size 📏

    • Micro fulfillment centers are between 3,000 and 10,000 square feet.
    • Traditional fulfillment centers are typically 300,000 square feet, but the Amazon fulfillment center is 3.6 million square feet!

    Location 📍

    • MFCs are located closer to highly-populated cities in order to quickly fill those orders.
    • Traditional distribution centers are located in more rural areas in order to accommodate their size.

    Storage Capabilities 📦

    • Micro fulfillment centers have enough space to store roughly 24-48 hours of inventory.
    • Larger fulfillment centers have the space to hold inventory for several months.

    Packaging Capabilities 🎁

    • MFCs are great for small-to-medium e-commerce and retail stores because they can accommodate specialized packaging.
    • Traditional fulfillment centers are simplified due to the sheer amount of inventory they must fulfill, meaning they can’t easily accommodate unique packaging requests.

    5 Benefits of Micro Fulfillment Centers

    Micro fulfillment centers aren’t the right choice for every retailer, but they do offer benefits for many e-commerce business owners. The top five benefits include:

    1) Lower Costs

    As an e-commerce business owner, you may be familiar with the “Last Mile Problem.” The typical delivery process follows this journey:

    • On a warehouse shelf
    • Packaged
    • On a delivery truck
    • Delivered to the customer’s doorstep

    The “last mile” of the delivery process is the final step, but it’s also the most expensive (comprising 53% of the overall delivery costs!) and time-consuming part of the procedure. When packages need to travel through rural areas, delivery points on a particular route could be several miles apart.

    Utilizing a micro fulfillment center shortens the last-mile delivery dilemma since products can be shipped closer to their final destination. This closer proximity lowers shipping costs tremendously.

    micro fulfillment center shelving with boxes

    2) Quicker Order Fulfillment

    A lot of MFCs are highly-automated. Machines carry out the picking process whenever possible in order to optimize operations. Automated micro fulfillment centers significantly speed up the actual fulfillment process— helping products get from the shelf, into their packaging, and onto a truck much faster than traditional fulfillment services.

    3) Faster Delivery

    Almost everyone across the country is familiar with online shopping. Electronic shopping is no longer a here-and-there activity for most people. Instead, families and individuals alike rely on online shopping more than ever— especially since the COVID-19 pandemic.

    Think about what you care about when you shop online: free shipping and fast shipping.

    Many large retailers like Amazon and Nike offer two- or even one-day shipping. Smaller retailers often need to find a way to offer the same thing in order to have a competitive advantage and a fair shot at receiving business.

    4) Better Customer Service

    Since MFCs are located closer to many consumers, customer service issues can be addressed incredibly quickly. Using this type of distribution center means that certain processes are more smooth, such as:

    • Returns
    • Refunds
    • Exchanges

    Another customer service perk is the “dark store.” Many micro fulfillment centers operate as dark stores, which means customers can actually pick up their orders at a local storefront without having to wait for shipping. The ability to choose from the delivery or pickup option that works best makes for more happy customers.

    5) Increased Sales Overall

    All of these above benefits— faster fulfillment and shipping, reduced costs, and better customer service— all work together to improve e-commerce businesses overall. These improvements make way for increased sales!

    When customers are happy, they remain loyal. So, if they can always count on fast shipping, easy returns, and reliable customer service from your company thanks to a micro fulfillment center, then it’s safe to assume they’ll continue purchasing from you and recommending your business to others.

    At the end of the day, increased sales = increased revenue, which helps you build your business and succeed as an entrepreneur.

    Bring a Micro Fulfillment Center to Your Community!

    Another worthwhile enterprise is opening and running a micro fulfillment center yourself! Clearly, they are incredibly beneficial for businesses of all sizes, and you can have a successful business by helping others with theirs.

    If there aren’t micro fulfillment centers in your city yet, that is a massive opportunity for business growth. Work with APX Construction Group to get an MFC off the ground. Contact APX today; we can’t wait to hear about your big ideas! We’ll even get you started with a free consultation.

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