Smaller Is Big in New E-Commerce Warehouses

Smaller Is Big in New E-Commerce Warehouses
Smaller Is Big in New E-Commerce Warehouses

An army of robots perform training exercises in a tight shed on the Brooklyn Queens Expressway.

Behind the graffiti-covered loading and unloading doors, machines made of pieces of metal move in a 23-foot structure, stacked in blue plastic bunkers. They go up, down and over the metal shelves as the bunkers are picked up and taken to the storage area. Downstairs, dozens of low-level mobile robots, similar to Roomba vacuum cleaners, sweep up the garbage to take it to a station where human workers eventually reach the goods.

This complicated dance, choreographed and automated by software, is the basis of a strategy called micro-completion. It aims to speed up the delivery of goods to consumers in urban areas by packing large quantities of goods in narrow urban areas.


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These locations are much smaller than typical, dispersed and labour-intensive distribution centres in remote industrial parks and are becoming a new focus for retail as they adapt to the dizzying changes in consumer markets. In recent years, some retailers have experimented with compact websites to fill orders, but the rush to online stores during the coronavirus pandemic is accelerating the shift to small, automated warehouses.

By moving these operations to the city’s warehouses and the back of the stores, companies hope that delivery times will be met, so that online orders arrive at their destination in hours instead of days.

The bunkers are stored in a micro-filling center managed by Fabric in Brooklyn, NY.

The Brooklyn facility, a former warehouse for street vendors in New York City, is dominated by a 7,500-square-foot automated storage system from Fabric, the U.S. Israeli robot supplier, which will also operate the facility when it goes live next year.

Fabric co-founder and CEO Elram Goren said companies that store goods in the facility should be able to pick and pack orders in five minutes or less with just a handful of employees.

We’re interested in a very small number of people, Goren said. According to him, a small system in Tel Aviv with four operators can process up to 1,000 orders a day.

Fabric plans to open another facility next year in Long Island City, Queens, with the goal of adding two more in New York City to create an urban logistics network that could serve multiple brands or retailers.

A worker collects products from bins in the microprocessing centre at the Brooklyn tissue factory.

Most microfinance operations are still in the testing phase, but there is growing interest in the strategy, as supermarket chains and other retailers face increasing demand for e-commerce during the pandemic. The market for automated microfilling centres is estimated at USD 1.2 billion by 2024, according to the research firm Interact Analysis.

Texas retailer H-E-B LP, in cooperation with warehouse equipment supplier Swisslog Holding AG, is installing several automated microfilling systems that will support the receipt and delivery of goods at the end of the chain, according to Swisslog in September.

The micro-functional structures of the AutoStore robot company are essentially giant cubes packed in trays on top of each other, with the most popular items on top for faster access. The robots move on top of the cube, take out the garbage cans and bring them to the station where the workers take over.

The most important thing is to store food in a space that can only be picked up by robots, but not by humans.

There is no vertical air space between the containers and only about 15 cm space between the stacks, says Mitch Hayes, vice president of e-commerce and retail at Swisslog Americas. Product units generally consist of three different sections: one for room temperature products, one for refrigerated products and one for fast moving products.

According to Swisslog, more than 200 AutoStore systems have been installed worldwide, with a growing number of micro-filling centres for external logistics service providers, manufacturers and retailers.

The mobile robot scans QR codes during transport of a dumpster.

Product chain


Kos. and the shopkeeper

Walmart Inc.

are among the companies offering various automated systems from suppliers such as Takeoff Technologies Inc. The fabric also builds a 10,000 square foot site for online grocery retailer FreshDirect LLC and plans to build another site in Dallas of about 40,000 square feet to process food and general merchandise orders.

Non-food retailers are in no hurry to accept this concept, industry experts say.

One of the exceptions is

Nordstrom Inc.

Last fall, a department store operator installed robotic systems in two warehouses in California to sort outgoing parcels and store and receive stock vertically. Automation takes up less space than traditional distribution and reduces the number of steps performed by human labour.

This enables us to deliver products to our customers faster, said Ngoc Phan, Nordstrom’s Vice President, Supply Chain and Engineering, in an interview last year.

For food companies facing increasing online demand during the pandemic, this technology offers a faster return on investment than large robotic warehouses. At the same time, it enables retailers to process orders faster than in the aisles where people walk, according to Tom Enright, an analyst with the vice president of the supply chain and retail research firm.

Gartner Inc.

You can make a lot more baskets and then cut them into pieces, Mr Enright said. You can receive your order at noon and place it in front of the door before 3pm or 4pm or earlier.

Write to Jennifer Smith at [email protected].

Copyright ©2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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