Distributed storage and robotics are coming trends in e-fulfilment

Video: Amazon fulfilment centre robots in action from designboom on Vimeo .

Thanks to ongoing growth of online retail, e-fulfilment continues to grow at healthy rates. Services are also developing to meet the ever more demanding requirements of online customers.

Outsourced providers have seen pressure on margins from increases in some costs – of warehousing, which has increased at above-inflation rates over the last five years – and labour, as unemployment has fallen and Brexit has reduced the supply of workers from Eastern Europe. However, e-fulfilment providers have been able to take measures such as adding mezzanine floors where possible to increase usable floor-space and negotiate attractive rates from parcels carriers to contain transport costs.

The overwhelming majority of outsourced providers and retailers operate a traditional model based on a centrally located hub in the Midlands that is able to support next day (or slower) delivery to the majority of the UK population. However, such a model cannot support same day deliveries – which are currently at a low level but growing.

Innovation is being led by the leading retailers with large scale in-house fulfilment operations rather than outsourced e-fulfilment specialists. Argos and Amazon have introduced distributed storage for fast moving lines. Argos Fast Track has several thousand fast moving SKUs that are kept in stock at its 800+ stores nationwide and can be delivered on the same day as the goods are ordered. Amazon Prime Now has a similar system with several smaller distribution centres (Prime Hubs) near key urban areas around the country.

Warehouse robotics can reduce floor space requirements by up to 50%, representing a potential solution to rising warehouse, as well as labour costs. Amazon, which purchased the leading supplier, Kiva, in 2012 and has since deployed over 80,000 robots in its warehouses worldwide, including some of its UK fulfilment centres, is the global leader in warehouse robotics. There are three main types of robots being deployed:

o Pick Assistants, which work alongside a human picker
o Autonomous mobile robots, which move shelves to the picker to increase the speed of picking significantly
o Automated storage and retrieval systems,

The first two can be retro-fitted to existing sites while the latter is a complete system for a new warehouse.

Other trends include delivery companies, such as DPD and Whistl, getting into fulfilment, enabling later cut off times and, potentially, distributed storage within their facilities – as is common in the Chinese market.

These and other issues are discussed in our report, UK e-Fulfilment Market Insight Report 2018-19