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Micro Fulfilment Centres

Veteran international investor John Corey comments

One of the market shifts that occurred during the COVID period was online shopping. Rather than running down to the shops on a Saturday, people can order what they want and have it delivered before the weekend.

Part of this form of 'shopping magic' is knowing that what you want is in stock and at the specific price you can secure the item. You do not need to run around if the first store you drove to shows the thing is out of stock.

Having an accurate inventory of what is available is the first step. As the shopper, you pull out your smartphone and you can comparison shop. Being able to hit the buy button kicks off the delivery process. In the 'old days', calling in an order might mean waiting 7-10 days before your purchase would arrive. What good is that?

To reduce delivery times and better serve you the customer, a warehouse operator needs an automated facility directly tied to the database showing you product information and price. Visualise reaching with your arm into the screen of your smart device and picking up the item you want so that it drops into your shopping cart. It would be best if you had the certainty that the thing is there and now in your cart. When you get to the checkout, you pay for your items, packaging kicks off, and the delivery driver routed is updated. In the optimal situation, you can request same-day delivery for everyday items. In the extreme, in the large cities, delivery might be in 2-hours or less. Like ordering a takeaway. You do not want to order days in advance of when you need the item.

Behind the scene, what is going on is something like the following. A large company with a large warehouse will ship their products to the distribution centre. To keep it simple, assume a soap company ships pallets of soap to an Amazon warehouse. They accept the shipment into the Amazon inventory, and your smartphone displays the soap when you are looking for it. The list is on the screen is accurate. If you hit the ‘Buy Now’ button, the systems kick into gear so you can receive your soap.

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