Micro-Fulfillment Strategies

In 2021, the micro-fulfillment model attracted the interest of many retailers and grocers (both large and small). For example, companies such as Walmart, Amazon, Krogers, and others have all begun implementing micro-fulfillment strategies by opening locations known as MFCs across the U.S.

But MFCs (micro-fulfillment centers) are hardly a fad in the shipping industry: they are here to stay. MFCs save businesses money and improve the customer experience significantly. Specifically:

• Order costs are reduced by nearly 75% with the use of micro-fulfillment.
• Businesses need to invest a few million dollars up-front to set up an MFC. But when one considers the fact that a well-designed MFC can produce roughly 600 units per hour, this initial investment is well worth it.
• Often, MFCs can fill orders very quickly, even a 4-hour turnaround on purchases is not unreasonable through effective use of micro-fulfillment.

Initiating an MFC strategy is no small feat, but it is a step that should be strongly considered in 2022.

Easy Returns For Customers

On average, the return rate for ecommerce purchases is roughly 25%.  Every time an item is returned, businesses must exercise their reverse logistics capabilities. Reverse logistics have always been a tricky consideration for companies, but in the age of ecommerce, where many people will purchase multiple items with the intention of returning one or more of them, it is one of the biggest trends to pay attention to moving forward into the new year.

Consumers want easy returns, and they expect that every business will provide this service. Therefore, practicing good reverse logistics strategies is a must for companies in 2022. Some basic ways to reverse logistics costs include:

• Packing items in ways that will minimize damage.
• Ensuring that customers are aware of your specific return policy.
• Providing return labels with shipped items.

Data from 2019 shows that the cost of returns was over 300 billion dollars, with ecommerce returns accounting for a huge chunk of this number. Innovations and methods to provide easy return strategies for customers are essential in moving forward.

Adaptable Supply Chains

In 2021, there was a brief moment of hope for the easing of supply chain backups as some items began to move more quickly. However, while some parts of the supply chain have freed up again, other portions are now experiencing delays and logjams. For this reason, it seems as if the supply chain slowdowns may continue for a few more years.

Therefore, implementing more regional and resilient supply chains is an important consideration for businesses in 2022. Some strategies to increase supply chain resilience entail:

• Working with a 3PL
• Increasing visibility throughout the supply chain
• Developing strong relationships with carriers

While there are obviously many other steps that bear consideration to improve resilience within supply chains and businesses, the three outlined above provide a good starting point.

Continued Contactless Pickup and Delivery Options

Encouragingly, it seems as though the omicron variant of COVID 19 leads to less severe symptoms than previous strains of the virus. However, many people are still concerned about transmission and exposure to the disease, leading to continued demand for contactless pickup and delivery options.

Many delivery services now employ contactless options, and it appears that these solutions will need to remain in place long-term. At this point, nearly half of all retailers offer contactless options. For those that don’t provide safe transaction and pick-up options, 2022 may be the time to start implementing a plan to appeal to the large consumer base that demands transmission-free options for pickup, delivery, and payment.

Automation Across the Board

In all areas of business, automation is essential. As far as marketing goes, nearly three-fourths of all companies have begun to leverage automation technology. Similarly, over 60% of businesses report that automation adaptations in various areas of operations have been integral to their success over the last few years.  

Some major automation trends to look for in 2022 include:

• Driverless trucks
• Automated warehouse processes
• Drone delivery

Granted, some businesses can run successful operations on a small scale using primarily pen-and-paper methods and solely relying on laborers. But for those businesses that are looking to scale and keep up with the incredible demand we are seeing throughout markets today, automation across all areas of business is vital to success.

Conclusion

Hopefully, the next few years bring with them stability and predictability, but judging by our recent past, this seems unlikely. There will probably be many more challenges that will motivate businesses and individuals to further adapt and overcome.

Through current research on trends in the shipping industry, we have an idea of what to look out for in the coming year. When everything is stripped away to the most basic elements, we can see that the recipes for success have two irreplaceable elements: 

1. Keeping customers happy
2. Using the best available technology

Whatever strategies and tools shippers decide to implement this year, keeping these two items in mind is critical.