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Oh, Hi Florida

We’re excited to announce that two-hour, same-day, and next-day delivery are now live in Florida.

Ohi’s latest expansion initiative brings instant delivery (next-day or faster service) to the majority of residents in the Sunshine State!

If you have any questions or would like assistance enabling instant delivery for your Florida customers, please reach out to your assigned Ohi rep or contact us here.

A Straightforward Guide to E-commerce Order Fulfillment

In the world of online retail, your customer experience must be smooth and consistent, especially when it comes to your order fulfillment—the process of delivering your product to your customer. 

Next-day and same-day delivery-once an option that e-commerce stores could choose to offer -is now an expectation in online shopping rather than the exception. Fast delivery is no longer enough, today’s online shoppers now want instant delivery. 70% of e-commerce customers say convenience is one of their top reasons for shopping online. It follows that a key to any successful e-commerce business is fast and efficient e-commerce order fulfillment services.

Whether you’re trying to set up a new online e-commerce platform or just improving your existing operations, this easy-to-read guide explains everything you need to know about e-commerce order fulfillment.

What is e-commerce order fulfillment?

E-commerce order fulfillment is an essential e-commerce business process that incorporates the entire process of receiving, processing, packing, and delivering goods to a customer. It begins from the moment a customer places an order on an e-commerce platform/website and ends when they physically receive their order. 

In certain cases when a customer seeks an exchange or reimbursement of the items, the return process also becomes a part of the order fulfillment process.  There are various ways e-commerce businesses can fulfill orders:

  • Some retailers and companies take care of the entire fulfillment of orders in-house
  • Others use a third-party logistics (3PL) provider to shoulder some of the burdens.
  • There is also the option to outsource your order fulfillment to a micro-fulfillment provider like Ohi, to enable two-hour, same-day, and next-day delivery in key metro areas.

What are the steps in e-commerce fulfillment process?

Your e-commerce fulfillment process is something that should be streamlined and optimized to get your orders from the warehouse to your customers’ doorstep as quickly as possible. 

While there is no one-size-fits-all order fulfillment strategy, the broader steps that a product moves through within the order fulfillment process are very similar, regardless of the company size or type.

1. Receiving inventory 

The first step in the e-commerce order fulfillment process is the retailer receiving their products at a nominated distribution location. 

This can either mean receiving the goods first-hand at your place of business or outsourcing to a 3PL provider to manage to receive the stock at an external storage location such as a warehouse or a fulfillment center. 

You also have the option of joining a micro-fulfillment center network, which can work very well if you’re a DTC brand with an urban client base. In this scenario, you can inject inventory into the network at one or more hubs, which are traditional distribution centers that then handle the transfer of your inventory throughout the micro-fulfillment center network (and into all major cities).

2. Inventory storage

This refers to the location when and where orders are logged into inventory and stored ready to be filled.

Ideally, each item must have a Stock-Keeping Unit (SKU) identification code associated with specific storage space. This space can be as small as a spare room or as large as a warehouse, depending on the size of the business and its merchandise. 

Well-managed, organized, easy-to-access inventory storage is essential to the process of e-commerce order fulfillment to mitigate delays in customers receiving their goods.

3. Order processing

Once the customer completes their online transaction, the order is received and processed by the retailer’s e-commerce platform, ready to be filled at the storage facility.

This stage of order fulfillment includes item selection, packing the product/s suitably for transit (including choosing the right packaging to minimize costs and damage), and preparing the order for shipment. 

A few considerations to ensure smooth order processing are:

  • Accuracy: Small mistakes in your order can quickly snowball into logistical disasters or customer disputes that go from bad to worse. Keeping your inventory in fulfillment centers that are close to your customers is helpful here, especially for enabling instant delivery.
  • Supply chain visibility: Knowing how your orders are selected and packed before shipping can help you identify bottlenecks in the fulfillment process.
  • Packaging: Amazon sellers are instructed to select the right kind of packaging for their products, but this applies to e-commerce fulfillment in general. Choosing the right boxes and packing materials can help ensure your orders arrive in good condition. For example, any fragile or hazardous materials need to be identified and given clear, corresponding labels indicating they need special handling. If you are using micro-fulfillment (such as Ohi’s instant commerce solution), you may need little or no exterior protective packaging, since orders only need to travel a short distance to the end customer.

4. Shipping

At this stage, the order leaves the storage location and is shipped to the customer via a variety of methods of transportation. 

Small businesses usually opt to ship their orders via services like UPS or FedEx. Larger brands and e-commerce companies with the resources to do so have access to a wider variety of shipping methods, or often choose to partner with micro-fulfillment services like Ohi, to ensure that each order is accurate and arrives quickly, which can drive increased conversions and improve customer loyalty.

Shipping logistics are a crucial element in the e-commerce order fulfillment process. You can have a great product, but how it is delivered can make or break your reputation.

Here are a few e-commerce shipping best practices to consider

  • Be mindful of the shipping costs as shipping costs are a major factor in customers’ online shopping cart abandonment, whereby 54% of shoppers did not proceed with their order because of e-commerce delivery fees. A 2018 study showed that 83% of US shoppers said that free delivery/shipping was their most important deciding factor when ordering online.
  • Integrate live-tracking to keep the customers informed. 97% of online shoppers want full transparency when their orders are shipped, including live updates at each step, from when it leaves the fulfillment center to when it’s dropped off. It minimizes the anxiety they have about their orders going wrong – and practically the worst thing you can tell a customer when they ask you how their order went missing is “I don’t know.”
  • Give customers SMS and email updates when their order gets loaded onto the delivery vehicle leaves the fulfillment center, starts its transit, and arrives at their location gives them confidence in your brand and makes it more likely they’ll have a positive experience and possibly even leave a positive review for you.
  • Be sure to also keep your messaging consistent with your live-tracking updates and overall brand guidelines—it’s an essential part of your post-purchase experience.

The above-mentioned best practices will help reduce the burden on your customer service team by shrinking the margin for error that causes complaints and disputes to happen. 

5. Returns processing

When you are considering your e-commerce order fulfillment process, it is advisable to plan beyond the shipping stage and consider customer exchanges, returns, and reimbursements, too.

A fast, accurate, and hassle-free process for dealing with returns, restocking, and discarding of damaged items, as well as customer refunds, must be established as part of your online order fulfillment service.

This need is inherent in almost every e-commerce business. It’s how you manage it that will make all the difference.

Types of e-commerce order fulfillment

There are a few different ways in which to manage your e-commerce order fulfillment. We’ve outlined some of the most popular here.

Third-party logistics (3PL) 

Many third-party logistics providers will handle the warehousing, packing, shipping, and even return steps of the order fulfillment process for e-commerce businesses.

As businesses grow, outsourcing order fulfillment becomes necessary to ensure all online orders are fulfilled to meet customer expectations.

Using a third-party fulfillment service also tends to speed up order fulfillment as many of these companies use automation technology to complete the process faster than manual completion. Shopify acquired 3PL provider Deliverr this year to simplify their inventory management and offer two-day and next-day shipping for this reason. Similar services from other providers can offer DTC e-commerce brands reliable nationwide order fulfillment capabilities, which they can later augment with instant delivery services (for faster delivery to end customers) via providers such as Ohi.

Micro-fulfillment

Micro-fulfillment involves the strategic placement of smaller-style storage facilities in densely populated areas, or near your target market demographic.

Online shopping and e-commerce platforms are driving the micro-fulfillment center trend, allowing e-commerce brands to forward-position their inventory closer to their customers’ geographic location, reducing the cost of transportation and offering their customers instant delivery.

Ohi specializes in enabling instant delivery for direct-to-consumer brands via micro-fulfillment on its platform of micro-fulfillment centers.

In-house fulfillment

This is a popular approach for larger businesses and e-commerce brands that have the resources to do all their fulfillment themselves, in their own spaces, and within their own management. Doing order fulfillment in-house gives you a higher degree of control over your logistics, but also requires that you store and process your orders yourself.

However, doing your own fulfillment in-house can be very resource-intensive and is therefore beyond the ability of many e-commerce brands to execute. In-house fulfillment requires an extensive network of brick-and-mortar stores and distribution centers (if delivery speed is a priority) and the personnel to ensure reliable and accurate order processing.

Dropshipping

In dropshipping, most of the supply chain process is outsourced for a more hassle-free and hands-off experience. However, you uniquely never actually own the merchandise you are selling.

Dropshipping is when a seller purchases their inventory from a third-party middleman rather than keeping it in stock themselves—they only buy products to fulfill when the customer makes an order. This way, the e-commerce seller doesn’t have to handle the fulfillment logistics themselves. e-commerce stores that make use of dropshipping often work with multiple suppliers to fulfill orders.

Outsourcing your warehousing requires low overhead and smaller upfront investment, but it comes at the expense of losing supply chain visibility and control over the fulfillment process.

How to plan your e-commerce order fulfillment strategy?

To determine which e-commerce order fulfillment process and strategy is going to work best for the nature of your business, there are a few important factors to consider.

Location

To cut shipping costs and keep delivery time to a minimum, it’s advantageous to forward-position your e-commerce order fulfillment centers close to your customers or at least have them in a central location (to ensure consistent, if not fast, delivery speed).

Location is especially important in micro-fulfillment-and it’s also one of its major advantages. 3PL service providers often store inventory in rural areas where warehousing costs are lower. Ideally, DTC e-commerce brands should have access to a national distribution network where they’re able to fulfill their online orders across the country in two days or less.

Delivery time

In a 2018 study, 53% of shoppers identified speed of delivery as the second most important factor when it came to evaluating online or e-commerce purchases, with 24% canceling their orders due to poor delivery speed. 3-5 day delivery no longer cuts it. We live in an age when customers want their online orders instantly, in minutes rather than days.

Creating a Standard Operating Procedure (SOP) for any in-house order fulfillment, as well as being clear about any 3PL processes and the estimated timeframes for fulfilling an e-commerce order, can help save time across the board.

In addition, repeat purchase rates tend to be higher for retailers who offer the shortest delivery times.

Many instant commerce providers such as Ohi enable businesses to provide instant or next-day delivery that is also carbon-neutral; another big plus for any consumer in our current climate.

Source: ShipperHQ

SKU count 

When devising your e-commerce order fulfillment strategy, you also have to consider how many types of products you sell (your SKU count), and how quickly you can fulfill and ship them.

How many different types of products do you offer? How big or heavy are they? How quickly can you deliver and ship them to the end customer? How quickly does your inventory turn over?

Micro-fulfillment tends to work best with smaller products, smaller inventory variety (and fewer SKUs as a result), and fast-moving inventory.

Customer support

How you support your customers, particularly in an online environment on e-commerce platforms, is central to your order fulfillment strategy’s success. Some things to look out for include:

  • Reply times must be short;
  • Online chat, click-to-call, and SMS text support are preferable;
  • Having an in-app chat is a great way to offer quick support; and
  • Additional and complementary social media customer service is also highly favorable. 

Supply chain tracking

Tracking and managing your supply chain in e-commerce order fulfillment is another important consideration.

The supply chain includes:

  • Suppliers
  • Producers
  • Warehouses
  • Logistical and transportation services. 

Effectively managing the different stages and steps of the supply chain will help you to continue to meet your customers’ ever-evolving expectations. Supply chain management ensures you have all the necessary inventory and logistical means to deliver almost instantaneously and to create an on-brand positive customer experience.

The challenges of e-commerce order fulfillment

Despite the perks that a well-executed e-commerce order fulfillment strategy can bring, several challenges must be addressed within any online order fulfillment strategy. 

Delays in shipping 

Modern consumers expect fast delivery, and where instant delivery is not an option, finding ways to reduce shipping time is the key.

Streamlining your processes and being strategic with your business or warehouse locations are two ways you can do this. In particular, the location of your e-commerce fulfillment centers will dictate how quickly your products can get to your customers.

Most customers also want either free shipping or shipping at a very low cost. This can be achieved by bringing up the price of your products to include the cost of shipping, or by adding free shipping on orders over a certain amount. 

Shopping cart abandonment

The rate of online shoppers abandoning their carts is high, especially when compared with in-store shopping purchases. 

This can be for a variety of reasons, particularly when additional costs are too high (such as shipping), when they’re forced to create a new account, or when your website doesn’t support an adequate variety of payment methods.

One way to combat the high rate of abandoned shopping carts is to create easier online checkout and payment options for consumers. Research suggests that avoiding the requirement for customers to create an account to be able to purchase with you can also reduce cart abandonment on e-commerce platforms.

Source: Feedvisor

Customer service

With the pandemic accelerating the shift to e-commerce and online order fulfillment, the market is much more competitive than it used to be. That means your customer service needs to be spotless for your e-commerce brand to be competitive. 

Creating a positive overall customer experience includes customer service communications options like automated chatbots and a dedicated customer support email.  Having systems like these in place makes ordering from you streamlined and hassle-free, and makes cancellations and returns less likely.

Inefficient returns

Returning orders promptly is just as important to the success of your e-commerce fulfillment as delivering them.

Your fulfillment centers (or at least one of your fulfillment centers or partners) must be able to quickly receive, evaluate, and restock returned goods as well as manage any exchanges that may be required.

Additionally, offering your customers the option of free returns can be a major perk that will help your e-commerce brand stand out.


At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

Ohi Accelerates Expansion with Launch of Ultrafast Delivery in Four New Markets

microfulfillment

Company Grows Its Network of Micro-Fulfillment Centers to Serve Seattle, Philadelphia, Dallas and Austin

NEW YORK–Ohi, the next-generation instant commerce platform that enables brands to meet their customers’ expectations of superfast delivery in under two hours, today announced that it has expanded into four new markets: Seattle, Philadelphia, Dallas and Austin. The company has identified significant demand for ultrafast, hyperlocal delivery of its brand partners’ products in these cities and has grown its network of micro-fulfillment centers to offer quick, convenient delivery options to customers in these areas.

“We’re committed to helping power our brand partners’ growth by providing an excellent, on-brand instant commerce experience that includes quick and convenient delivery options,” said Ben Jones, Founder and CEO of Ohi. “To help our partners reach and convert new customers, and drive loyalty and engagement among their existing customers, we’ve expanded our instant commerce platform into four new markets where our technology has identified exceptional demand for instant commerce.”

With its recent expansion, Ohi now offers instant commerce services in 12 major US metro areas. The company’s inventory and order management platform provides SKU-level demand intelligence that allows its brand partners to optimally position inventory closer to their end customers. Ohi is committed to providing carbon-neutral delivery and its micro-fulfillment centers ensure that e-commerce orders travel only a short distance to arrive at consumers’ doorsteps. Ohi further minimizes its carbon footprint by using reusable, sustainable packaging and bike, e-bike, scooter and foot couriers whenever possible. The company also offers a carbon-neutral e-commerce fulfillment option to its merchant partners and their customers.

“Ohi’s asset-light platform enables us to expand into new markets with minimal overhead costs,” added Jones. “This is just the start of our aggressive expansion strategy that will enable us to provide an instant-commerce experience that covers close to 45% of an e-commerce company’s overall demand by the end of the second quarter.”

Ohi’s instant commerce platform allows brands to offer best-in-class post-purchase experiences while retaining complete control of their brand story, data and customer relationships. For more information, visit Ohi.com.

About Ohi

Ohi is the leading instant commerce solution for direct-to-consumer and enterprise brands looking to grow their business by enabling powerful post-purchase experiences. Leveraging its proprietary, data-driven inventory management technology and robust micro-warehouse platform to forward position inventory within city centers, Ohi enables brands to offer a premium, environmentally responsible, instant or scheduled delivery experience to their customers.

Contacts

MEDIA:
Michael McMullan/Danielle Poggi
Berns Communications Group
mmcmullan@bcg-pr.com/dpoggi@bcg-pr.com

Oh, Hi Dallas 

MFC Announcement

We’re happy to announce that two-hour, same-day, and next-day delivery is now live in Dallas.

The home of America’s team, rodeos, and famous Texas BBQ is now a member of the Ohi instant commerce family!

If you have any questions or would like more information, please reach out to your account manager or contact us here.

Q&A: Understanding Micro-Fulfillment

QA Greg Michael

Given the ongoing trend towards instant commerce, micro-fulfillment continues to be a hot topic in the e-commerce space. We sat down with Ohi’s Michael Witalec (VP of Ops) and Greg Szczepanski (Head of Special Projects, Ex-GoPuff) for a Q&A on micro-fulfillment and how Ohi approaches it.


There’s been a lot of buzz around micro-fulfillment in recent years due to the rise of fast grocers and quick/instant commerce. How does Ohi fit into this trend?

Greg: Ohi is leading the next generation of instant commerce. Our unique distribution model enables brands to meet their customers’ expectations of rapid delivery on their own direct-to-consumer (DTC) websites. By offering a DTC-focused solution that helps brands with many aspects of their post-purchase experiences (centered on a curated instant delivery experience), we stand apart from other fast grocers and other quick/instant commerce models out there by giving control over the customer experience (and data) back to the brands themselves.

So, what is micro-fulfillment with Ohi like?

Michael: Micro-fulfillment is the miniaturization of traditional fulfillment, from both a space and time perspective. We’re in dense urban areas to intentionally shorten the distance to the doorstep, requiring a much smaller footprint. We’re tendering orders in much smaller batches and often interacting with the same person who will interact with the customer, which enhances the end customer experience.

What kind of products or brands work best with Ohi’s micro-fulfillment model and why? 

Greg: While micro-fulfillment works best with non-bulky items and lower SKU counts, as you might expect with inventory being distributed throughout the country in small non-traditional warehouses, Ohi prides itself on flexibility. We’re eager to explore innovative solutions with any DTC-focused brand.

Last-mile delivery seems like a critical success factor in micro-fulfillment. How does Ohi ensure timely and accurate last-mile delivery? 

Michael: Final delivery is critical to success because that’s where the direct interaction with the customer is strongest (and most tangible). We’ve built many strong delivery partnerships that enable us to optimize the final delivery experience for every order. Combine that with our LiveOps team and continuous system monitoring, and you get a big piece of our signature instant delivery experience.

What are some things for direct-to-consumer businesses to consider when choosing a micro-fulfillment strategy or partner? 

Greg: Great question. From a financial aspect, evolving a DTC-focused business delivery system has traditionally been critically important to reach or maintain profitability. Businesses invest deeply in their supply chains to reduce the cost of fulfillment and TnT, and this mentality is pervasive among operations teams. With Ohi, while we are favorable in the cost department for many situations (e.g. because inventory is forward-positioned), we find that the instant delivery experience presents unique ROI beyond cost reduction – in terms of the customer experience, which leads to improved repeat purchase rates, customer lifetime value, and other growth-focused ROI

Additionally, by leveling up their DTC performance with Ohi, brands enjoy greater margins and control over more of their overall business, while avoiding some of the negatives associated with their B2B2C channels, including chargebacks.

Given how important demand forecasting is for micro-fulfillment (because each MFC has very limited space), how does Ohi approach it?

Michael: Very carefully. Space is only a constraint over a fixed period of time, so with Ohi’s  AI-based predictive demand forecasting models and regular input from our brands, we’re able to achieve high in-stock performance with our MFC network. With our hubs, which we’ll talk about more, we’re also able to control the distribution to MFCs in real-time, based on inventory levels.

Fulfilling orders out of (what will eventually be) hundreds of MFCs sounds incredibly complex; how does Ohi keep it simple operationally for clients?

Michael: We learned early on that simplicity was critical to our clients, as they want to focus on growth opportunities and not day-to-day logistics. We borrowed from tried and true methods to launch hubs, which dramatically reduce injection points and aggregate demand for the client. From there, our team handles the more complicated aspects of allocation across the MFC network for our clients.

What are Ohi’s “hubs,” and how do they work with the micro-fulfillment centers?   

Greg: Ohi’s hubs help to facilitate replenishment of inventory to MFCs while simplifying the inbounding process for our clients via fewer injection points. Because they’re actual distribution centers and are much larger than MFCs, hubs maximize efficiency when it comes to the intake, processing, storage, and distribution of goods (to MFCs) for our clients. This means less money wasted paying for temporary storage, dealing with stockouts, or losing customers due to delayed or incomplete orders.

Traditional fulfillment typically involves much larger warehouses on the outskirts of cities. How does having MFCs hyperlocal to customers affect last-mile delivery costs?

Greg: Consumers nowadays want same-day deliveries. Many companies are trying, often unsuccessfully, to meet the demands of today’s customers with outdated fulfillment networks. 

Ohi MFCs utilize small and automated storage close to the end customer to achieve cost savings and accelerate delivery times. There are three key components that allow Ohi to perform this process successfully: 1) a robust enterprise and logistics management system to manage the warehousing, inventory, and order management; 2) forward logistics facilities that minimize travel distance/time/cost; and 3) easy technical integration with clients’ e-commerce platform.

Increasing oil prices have been quite the headline in recent months. How do rising energy costs affect Ohi’s micro-fulfillment cost versus, say, traditional fulfillment with next-day air?

Michael: We’ve been in a dynamic environment since our launch a couple of years ago, with real estate, labor, and now fuel markets becoming volatile. Our model utilizes economies of scale with larger movements of inventory to a forward location (the MFC), reducing fuel on a per-order basis. Combined with our growing use of electric-powered and eco-friendly transportation, we’re reducing our carbon footprint while reducing dependence on traditional energy sources.

It seems like micro-fulfillment might involve a lot of extra transportation/trips – how does Ohi make this sustainable? 

Greg: With Ohi forward positioning our clients’ products in small MFCs around the country, we have substantially reduced the amount of transportation and delivery required on a per-order basis, despite the increase in the number of dedicated deliveries. Importantly, our close proximity to end customers allows us to use eco-friendly transportation (walkers, bicycle messengers, and electric vehicles) and reduce the need for wasteful cardboard packaging. For our residual carbon footprint after those measures, we’re able to use carbon offsetting (through our partner, EcoCart) to provide carbon-neutral order fulfillment.


At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

What is Micro-Fulfillment? A Simple, Straightforward Guide for E-commerce Retailers and DTC Brands

microfulfillment

TABLE OF CONTENTS:

Retail shopping shifted towards online e-commerce during the pandemic in irreversible ways. That shift has come with the expectation that their goods be delivered at minimal cost, come with fast and responsive customer service, and that they are delivered to their doorstep within a few days or even a few hours.

Amazon popularized the concept of two-day order fulfillment – that with a few clicks on a website you can have almost every conceivable product from clothes to groceries delivered straight to your doorstep within two days or less. What was once unique to the e-commerce giant has now become the industry standard in online retail, thanks in no small part to the need for contactless shipping brought about by COVID. It’s estimated that COVID accelerated the shift towards online shopping by about five years.

That’s all well and good when you’re a national chain like Whole Foods or Walmart that has the resources and logistical capacity to offer two-day shipping to customers across the country. However, two-day shipping isn’t as accessible to smaller e-commerce brands that don’t have that kind of supply chain reach and raw economic power.

Traditional warehouses are too large to operate within urban city centers.

If you’re the owner of an e-commerce store that delivers nationwide, how can you ensure that your products can make it to your online customers in two days or less for the goods they need as soon as possible? You don’t do it by buying out one big warehouse floor in the middle of nowhere hundreds of miles away from where your customers actually live. You do it by using lots of little smaller ones in cities just across town from their house or office.

For many DTC e-commerce brands, micro-fulfillment is becoming the only realistic way that can satisfy the expectations of their online customers and enable them to compete with the likes of Walmart and Amazon.

They are becoming such a popular option for online retailers that it’s projected there will be one micro-fulfillment center for every 10 grocery stores by the end of 2030. It’s not just smaller retailers that are making use of them either – retail and grocery giants like Walmart and Whole Foods that see where the future of online delivery is heading are starting to repurpose their retail stores as MFCs for online order fulfillment.

We’ll explore what micro-fulfillment is and how it works, and how it stands to benefit your business.

What is micro-fulfillment?

When people think of online delivery, they typically think of huge warehouses the size of football stadiums or small airports filled with pallets and boxes sorted by minimum wage workers with orange vests preparing for deliveries across a state or the whole country.

Micro-fulfillment works differently. It operates on a much smaller scale, with less inventory, and with a much more automated workflow.

Micro-fulfillment makes use of small-scale warehouse facilities in big urban areas like New York City and Los Angeles where most online retail activity happens, to keep inventory closer to the consumer. 46% of urban shoppers prefer shopping digitally compared to 38% and 34% of those based in suburban or rural areas respectively.

The micro-fulfillment model makes use of automated warehouses to reduce the distance between customers, making deliveries cheaper, faster, and easier. The goal of micro-fulfillment is to reduce the distance between customers and their orders to reduce transportation costs and delivery times.

Organizing your e-commerce supply chain in this way enables brands to offer same-day delivery and potentially even sub two-hour delivery. Two-day delivery is becoming expected by consumers who are used to two-day order fulfillment from Amazon. Customers buying online now want delivery in a few days or even within hours, and this is quickly becoming the baseline for top-performing e-commerce brands.

It’s difficult for the vast majority of e-commerce brands to implement same-day delivery inhouse, due to the enormous capital needed to build their own warehouse networks. Enabling micro-fulfillment through partnerships makes instant delivery possible for these brands.

What is a micro-fulfillment center?

Micro-fulfillment centers (MFC) are small-scale storage facilities. They’re often in unused retail or commercial space that’s been repurposed for storage and order fulfillment. Micro-fullfilment centers are used by e-commerce brands to store their inventory closer to their customers to speed up delivery times and reduce the cost of transit.

MFCs typically occupy a space of 2,000-5,000 sq ft. of space. Apart from the physical facility itself, they also rely on inventory and order management systems to maintain sufficient inventory availability and to process online orders. MFCs are much smaller than traditional warehouses or fulfillment centers, which can often be larger than 50,000 square feet.

Large national brands with a robust network of brick-and-mortar stores can potentially implement micro-fulfillment using their brick-and-mortar stores to fulfill online orders. This is done more and more by chains like Whole Foods, which opened up dark stores during the pandemic used exclusively to fulfill online orders.

The micro-fulfillment model lets brands operate their own repurposed MFCs adding the convenience of multiple delivery methods, such as curbside delivery, in-store pickup, or delivery to the customer’s doorstep. Micro warehouses have proven highly successful for grocery chains, and they’re starting to catch on in other product categories like beverages and beauty/personal care.

Benefits of micro-fulfillment centers

So much for how MFCs work, but what makes them so much better than more conventional ways of fulfilling online orders?

There’s a reason why retail chains big and small are starting to embrace the micro-fulfillment model. It enables brands to offer two-day shipping, so they can elevate their customer service to a level that wouldn’t be possible otherwise.

1. Automation Creates Faster Fulfillment

Some MFCs, but not all, automate a lot of the shipping and storage process using robots and/or automatically generated packing lists, which cuts down on manpower and allows MFCs to processes orders quickly and efficiently

2. Efficient Use of Storage Space

Micro-fulfillment centers serve multiple brands rather than using a big space to serve just one. Therefore, they pack more inventory into a smaller space and store more items per square foot. The use of this smaller space is less expensive than setting up a new location or renting out your own warehouse, which means they involve much lower leasing and operating costs, especially when managed by a partner with sufficient scale, like Ohi.

3. Reduced Last-Minute Delivery Cost

The last mile of an online order’s delivery accounts for 41% of the total supply chain cost to deliver an item. The longer an order has to travel to get to its destination, the more chances there are for things to go wrong in that last mile like order mixups, traffic jams, and other delays.

When you keep the origin of fulfillment hyperlocal to the consumer, those items are subject to fewer delays like being stuck in traffic. Those faster delivery times optimize your order fulfillment and can also save you money on transportation. The potential cost savings are further magnified when your products are somewhat heavy, as traditional delivery methods charge by weight, whereas micro-fulfillment-based providers like Ohi have flat pricing regardless of weight.

3. Easier and Faster to Integrate and Scale

Not many brands can afford to open a huge warehouse staffed with people and have conveyor belts, sorting machines, and an inventory management system to go with it.

MFCs are smaller and less expensive to integrate into your existing operations. It’s a much smaller initial investment and a less risky commitment, which makes them more accessible to small businesses. That makes it much easier for them to expand into new areas and regions as they grow.

4. Ultra-Fast Delivery and Enhanced Customer Experience

Even one misplaced order or late delivery can tarnish your brand’s online reputation in ways that are hard to repair. The smaller scale and localized delivery model of MFCs make it easier to ensure that customers get the correct items on time and that they’re satisfied with their shopping experience, including their post-purchase experience.

MFC models like in-store pick-up and curbside delivery give customers more variety in how they receive their products.

5. Lower Environmental Footprint

MFCs aren’t just more efficient and cost-effective, they’re also more sustainable.

Using small, localized fulfillment centers rather than huge warehouses staffed with hundreds of people at the hubs of miles-long trucking routes reduces the carbon emissions your company produces.

Apart from being the right thing to do, it also reduces the negative externalities of carbon-positive supply chain logistics.

You can use it as a part of your marketing too. Using localized delivery systems makes you effectively carbon-neutral, so you can truthfully position your brand as an eco-friendly company. Consumers are more likely to purchase from a purpose-driven brand that supports a cause they believe in, such as climate change.

Difference between fulfillment vs distribution

The terms fulfillment and distribution are often mistaken from one another, and it may be necessary to distinguish them when deciding to transition to MFC-based fulfillment.

Distribution and fulfillment each refer to two steps of the supply chain, from the macro to micro-scale.

Distribution refers to moving sales inventory regionally across larger distances. It involves moving whole pallets or containers or goods to warehouses or distribution centers to be stored until they’re ready to be put on shelves. The products inside the distribution units are to be fulfilled individually.

While distribution moves large volumes of inventory from one place to another, fulfillment moves each individual item to the end-user.

The fulfillment process is usually carried out from a smaller warehouse, where items are stored locally until they can reach customers in a convenient and timely manner. While distribution centers store items in bulk in the long term, fulfillment centers use more limited storage space and store goods for shorter periods.

Delivery from fulfillment centers takes place locally and is carried out at a store, via curbside pickup, or delivered by and by a courier or a gig economy worker from an app like Shipt or Instacart.

Micro-fulfillment by the numbers

It’s one thing to point to the success of household name brands like Walmart, Target and Whole Foods who’ve managed to make the MFC model work for them. A closer look at the available studies and data examining broader trends about MFCs further confirm that micro-fulfillment is the future of online shopping.

With that in mind, here are some statistics about micro-fulfillment that are worth knowing:

  • MFCs Are Projected to Have a Cumulative Worth of $36B by 2030: and about 6,600 nationwide at its current rate of growth (source)
  • The Urban Percentage of the World’s Population is Projected to be 60% by 2030: and as much as 75-81% in more developed countries (source)
  • 38% of Online Shoppers Will Abandon Their Order if it Takes Longer Than a Week: this is due to the precedent that Amazon 2-day delivery set – now consumers expect the same thing whenever the shop online (source)
  • Most MFCs Will Be Retail-Based by 2025: this indicates that retail is the most common business model for micro-fulfillment – but by no means the only one (source)
  • Online grocery sales will more than double their current market share by 2025: which will be 21.5% compared to 10% in 2020. That will create more need for MFCs to fulfill those grocery orders (source)
  • Half of Online Shoppers Abandon a Purchase If They Can’t Get Their Order Within a Week: customers don’t just want fast delivery, they want free delivery – another standard set by Amazon (source)
  • More than 25% of Shoppers Would Abandon a Cart Online If Same-day Shipping Isn’t Available: offering 2-day or same-day delivery is no longer a nice-to-have option – more customers are starting to demand it (source)
  • Online Alcoholic Beverage Sales Grow by 8% per Year Between 2017 and 2022: as with groceries, there is a growing demand of online alcohol delivery, and for much the same reason – it’s the kind of product you’d want to have that same day rather than later that week
  • 75% of Consumers Expect Delivery to Be Free Even on Orders under $50: and for most brands, MFCs are the only realistic way to provide this (source)
  • 42% of Retailers Say That Faster Fulfillment of Online Orders Is Their Top Priority: which is an indicator that traditional fulfillment methods can’t keep up with rising customer demand for fast delivery and free shipping. MFCs can (source)

Micro-fulfillment business models

Micro warehousing can take on a few different shapes and forms, depending on a retailer’s specific needs and access to resources. Some make use of small, densely-packed warehouses that use machinery and automated inventory lists, and others make use of the floor space they already own to ship from their own stores or offer curbside delivery.

Here are a few different ways micro-fulfillment can work:

1. In-House Micro-fulfillment

In this model, retailers use their own physical brick-and-mortar locations to fulfill online orders, essentially turning their own stores into a network of MFCs.

The ease of scalability, economization of space, and added consumer convenience of this method have led more and more brands to embrace it, including national retailers like Kroger and Target. The caveat, of course, is that only sufficiently large retailers with a nationwide network of brick and mortar stores can implement in-house micro-fulfillment.

2. Marketplace Partnership

Let’s say that you’re interested in selling your products alongside hundreds of other competing brands in a marketplace that specializes in quick commerce or micro-fulfillment enabled e-commerce.

In that case, another option you can consider is partnering with a quick commerce marketplace that uses an existing network of micro fulfillment centers and dark stores to fulfill e-commerce orders. Such marketplaces include JOKR, GoPuff, and Gorillas. In this model, your customers order from the marketplaces (think Amazon but with micro-fulfillment), which control the customer experience and retain the customer data. 

3. Direct-to-Consumer

If you want to employ micro-fulfillment with your direct-to-consumer (DTC/D2C) channel, you can choose to partner with a DTC-focused instant commerce provider like Ohi, which gives you access to their nationwide network of MFCs and technology that enables instant delivery.

Ohi integrates with your existing DTC website (on Shopify, BigCommerce, WooCommerce, or other platforms), adding sub two-hour, same-day, and next-day delivery options to your online store.

As a new client, you simply inbound inventory to one or more of Ohi’s hubs (distribution), and the Ohi team manages distribution through the network to MFCs in many of the largest metro areas in the US.

Brands that work best for micro-fulfillment

Ecommerce micro-fulfillment centers have opened up a lot of doors to brands that couldn’t otherwise offer the convenience and speed of same-day delivery.

That being said, they’re not a one-size-fits-all solution and they come with their own limitations. The MFC model works best with certain kinds of brands and products, such as:

1. Higher-Order Volume, Lower SKU Count

E-commerce distribution centers are best for brands that ship a lot of the same kind of item using a relatively low number of SKUs. The localized nature of MFC delivery doesn’t lend itself particularly well to highly specialized items like bespoke crafts, artisan goods, or customized products.

2. Consumables

The instant and local nature of micro-fulfillment delivery means that brands that make use of MFCs usually carry things that customers want or need immediately. They’re often the kinds of products you might find at your local convenience store or pharmacy, such as:

  • Food, snacks, and beverages
  • Cosmetics and personal care
  • Toiletries and cleaning products

When you go to your local gas station to buy something like a roll of toilet paper or a liter of soda, it’s usually because you need it at that moment rather than two days from now. For this reason, micro-fulfillment is best for items that customers want immediately.

3. Non-Bulky Items

Local fulfillment centers do more with less and have a smaller amount of storage space to work with. They optimize for storage space and there’s no sense in filling a relatively small space with bulky items that don’t turn quickly.

For this reason, micro-fulfillment works best for non-bulky products that can be packed tightly together. Micro-fulfillment is better suited to smaller goods that can be packed and shipped easily without a lot of manpower or special handling. This excludes items like furniture, large electronics like TVs, and larger appliances.

Ohi instant delivery gives your DTC customers the convenience and speed they expect

The shift towards online retail has elevated customer expectations to the point where consumers now expect to be delivered their items within a day or even a few hours. Micro-fulfillment is the fulfillment strategy that lets you provide that.

To sum up, here are some of the benefits that micro-fulfillment gives your e-commerce brand:

  • Ultrafast delivery speed
  • Efficient use of storage space
  • Reduced last-minute delivery costs
  • Scalability for same-day and sub two-hour delivery
  • Enhanced customer experience, which leads to higher CLV
  • Lower environmental footprint

Partnering with a micro-fulfillment-based platform (like Ohi for DTC brands) gives you all of these benefits and lets you provide a level of customer experience and delivery speed that just isn’t possible with traditional fulfillment.


About Ohi

At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

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