Hyperlocal ecommerce fulfillment set for accelerated growth in the US

Stewart Samuel
Program Director - Canada

Date : 10 April 2019

We look at the prospects for hyperlocal ecommerce fulfillment as one of the leaders in the space, Takeoff Technologies, gets set to enter a period of rapid acceleration.

Deploying technology into store backrooms

Takeoff Technologies has developed an automated fulfillment solution for grocery ecommerce that is positioned in the backrooms of existing stores. Taking around 10,000 sq ft of space, the solution can be deployed to fulfill orders in multiple stores, using a hub and spoke model, fulfilling orders faster and at lower cost than manual picking. It also enables retailers to utilise excess space in larger stores. In the US, the retailer has partnered with Ahold Delhaize, Albertsons and Wakefern. Its first site went live last year with Sedando’s Supermarkets, a regional chain in Florida.

Source: Takeoff Technologies

$150m, 50 site order

In partnership with KNAPP, a leading warehouse logistics and automation firm, the companies have confirmed a $150m, 50 site order. This marks a new stage of development for the partnership and a significant roll-out of the technology. Future installations will feature the latest iteration of the solution which optimises the space needed for order sorting and adds flexibility to the design of the fulfillment centre.

Accounting for $1bn ecommerce sales

While Takeoff Technologies has not disclosed which retailers it will be working with on the accelerated roll-out, it is expected to account for $1bn of ecommerce sales. By the end of 2020, the company expects to have accumulated at least $2bn in gross merchandise volume for its retail partners.

Building a pathway to profitability

With the channel set to grow to $60bn by 2023, retailers in the US are focused on building a pathway to profitability. Most are focusing on the two major cost elements, picking and delivery. Several different fulfillment solutions are being tested or rolled-out. These include traditional store-based picking, including on-demand, crowd-sourced models. Most retailers have partnered with companies such as Instacart and Shipt to offer same-day delivery and scale-up their operations at pace.

Recently, Ahold Delhaize launched a hybrid dark-store concept, while Kroger is partnering with Ocado to develop automated customer fulfillment centres. Walmart is also testing its own hyperlocal fulfilment solution in partnership with Alert Innovation.

Providing customers with options on cost and speed of delivery

Ultimately, retailers are likely to settle on a range of different fulfillment solutions. This will be driven by a need to serve customers in both urban, suburban and rural markets and provide them with different choices in terms of the cost and speed of delivery.

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