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Fulfillment Is Where the Action Is Happening in Retail

Fulfillment is rising to the fore in retail, and online shopping is driving its surge.

E-commerce is pilfering traffic away from struggling malls, and an influx of consumers equipped with a digital shopping portal always just a few taps away means retail is hard-pressed to serve shoppers who want what they want when they want it.

In 2020, the idea of two-day shipping almost has a quaint ring to it, when Amazon has rewired America’s urban elite to expect their almond milk, hand soap and six-pack of socks in two hours or less.

Time, in the world of digital retail, is of the essence.

Data from Statista says stateside online sales of apparel and accessories will contribute more than $145 billion in revenue by 2023. With online shopping redrawing retail, the business of moving goods from warehouse to doorstep is attracting innovators rethinking what fulfillment and distribution looks like.

Micro fulfillment

Microfulfillment is just one of the ways tech startups are pushing this sector of logistics into the digital age. The micro prefix means companies are finding creative ways to bring “goods closer to the people,” said Anne Marie Stephen, U.S. sales director for retail and e-commerce for Fabric, which rebranded from its previous moniker Common Sense Robotics in October when it raised $110 million.

Even if they were just a few years ago, next-day and even same-day shipping aren’t meeting consumer expectations anymore, Stephen said during the High-Tech Retail summit at CES earlier this month. Offering two options, the four-year-old robotics logistics firm has developed an “efficient, goods-to-person, single-picking process” using autonomous bots to quickly fulfill consumer orders that roll in online in a fulfillment-as-a-service scenario. The startup’s in-development Brooklyn facility, set to go live this quarter as the first of many such microfullment centers, will help merchants “plug and play and become competitive immediately in the on-demand space,” she added.

But Tel Aviv-founded, New York City-based Fabric also has a solution to help retailers utilize their existing network and real estate footprint to deliver lightning-fast fulfillment, Stephen noted. This option, launched in the fall, offers flexibility and customization, enabling sellers to tailor to their inventory levels, desired reach and particular budgetary constraints.

Credit the perennial “elephant in the room” for fulfillment’s high-tech makeover. “Amazon has shown us today what the future looks,” said ff Venture Capital partner and fellow CES speaker Oliver Mitchell, citing the tech titan’s $777 million acquisition of Kiva Robotics eight years ago as the catalyst that shifted the industry’s benchmark for shipping and delivery.

Robots and small-scale storage centers will play a larger role in digital commerce. “We’re solving retail problems that are happening today, and it’s not a matter of if, it’s a matter of when,” Stephen said.

Attabotics is similarly giving fulfillment a mini makeover, working on the thesis that retail needs “democratized distributed infrastructure optimized for modern consumer behavior,” CEO Scott Gravelle told Sourcing Journal in an interview at NRF’s Big Show.

Much as malls cluster stores together with shared resources like escalators, food courts and parking lots, Attabotics co-mingles like-minded brands inside its urban-centric facilities. And in a departure from the sprawl often associated with warehouses, the Canadian firm builds vertically, taking cues from how ants (yes, ants) organize their colonies. Dozens of robots climb and descend inside Attabotics’ vertical fulfillment towers, ensconced behind movable white panels for a visually elegant logistics operation.

To hear Gravelle tell it, digital commerce in the 2010s cast its gaze on optimizing the front-end user experience, making each new website sleeker and shinier than the last. Now, retail is waking up to the realization that its biggest constraint is not necessarily the bells and whistles its sites may or may not have but the painful limitations of the supply chain, what the CEO calls “the red-headed bastard stepchild of every organization.”

Though the holiday shopping season squeezes retailers and their supply chain partners, Gravelle says Attabotics’ proving ground came much earlier in 2019. Nordstrom, the startup’s largest client, put the company through the paces with its summertime anniversary sale, paving the way for smooth sailing come Christmas, he said.

In its work with customer Canadian Tire, one of the largest retail conglomerate’s north of the border, Attabotics is working the kinks out of what could be its next wave of innovation. Seven Canadian Tire brands downsized from as many warehouses into just one, slashing operating expenditures by 70 percent, Gravelle said.

Making multi-tenancy fulfillment work can be a “daunting task,” he added, largely because it means integrating with a mishmash of ERP platforms. But Attabotics recently partnered with Microsoft, whose Data Factory technology translates ERP data to ensure the startup gets standardized actionable information on its end, a critical component of enabling multi-tenancy facilities. Without that Microsoft integration doing the heavy data lifting, Attabotics wouldn’t be able to ensure yoga pants seamlessly end up in Atmosphere-branded bags, auto parts go into Auto Zone packaging, and baseball gloves get boxed up in Sport Check-logoed containers, Gravelle said, giving customers a “consistent brand experience.”

“This multitenacy architecture is fundamental to what we see the future is,” Gravelle said.

Nano

Bigger isn’t always better, and even microfulfillment’s shrinking footprint is too unwieldy for some circumstances. That’s where nano distribution comes into play.

Asaf Hachmon co-founded Bond in March to help digitally native startups, in addition to large-scale CPGs, execute a seamless post-purchase experience that mirrors their brand DNA, he told Sourcing Journal. The company operates a network of nano distribution centers, what Hachmon describes as encompassing 400 square feet to 600 square feet, or roughly one-tenth of a microfulfillment center’s footprint. Clustered in dense city centers, Bond’s nano facilities store the products that, based on demand predictions filtered through e-commerce integrations, customers are most likely to purchase.

If brands have prioritized putting out premium product, they’re now beginning to invest in the service and experience side of their business, Hachmon said, and they often lack the infrastructure to deliver at Amazon’s level. “Last-mile delivery is like satisfaction death valley,” the CEO and co-founder said in a statement Tuesday announcing the startup’s $15 million raise from investors Lightspeed Venture Partners, MizMaa Ventures and TLV Partners.

“Online brands spend tons of money on ensuring consumers have the absolute best user experience while on their website, yet are forced to entrust couriers to deliver products with that same level of care and attention—and all too often they don’t,” Hachmon said.

The Israeli native discovered this first hand when he launched a Tel Aviv grocery DTC, Shookit, years ago. Setting up a website, launching Instagram ads and designing slick packaging were a snap, he said. But discovering just how badly the final-mile experience would often collapse drove the light-bulb moment that “the last yard, along with the brand’s hyperlocal micro-moments, needs to be leveraged, customized and supported by the right infrastructure,” Hachmon said.

More than 30 New York digital retailers leverage Bond’s six nano distribution centers, delivering to Manhattan and Brooklyn via “trike” couriers, and select areas in Queens and New Jersey, thanks to special partnerships. Consumers can also use Bond’s app or website to schedule their packages to arrive in any of three delivery windows, and set when a courier will pick up a return.

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