Micro Fulfillment Centers are Delivering Happiness
Tony Hsieh (1973–2020), the visionary behind the online retailer Zappos and the author of the best-seller Delivering Happiness — a path to profits, passion, and purpose, has recently deceased. It drove me to read his book yet again. In his book, he shares the different lessons he has learned in business and life, from starting a worm farm to running a pizza business, through LinkExchange, Zappos, and more. This book shows how a very different kind of corporate culture is a powerful model for achieving success — and how by concentrating on the happiness of those around you, you can increase your own. After debuting as the highest-ranking newcomer in Fortune magazine’s annual “Best Companies to Work for” list in 2009, Zappos was acquired by Amazon in a deal valued at over $1.2B. Zappos was a pioneer in the online retail industry and was the first company that actually pulled off selling apparel online. The main reason they have managed to do so is by taking a non-compromising customer-centric approach and by providing a best-in-class customer experience and service. In his book, a specific segment caught my eye.
While reading it I couldn’t believe what I was reading — Even back in 2009, Tony Hsieh is describing the exact need for Micro-Fulfillment-Centers! Here the segment from the book:
“ Most of our efforts on the customer service and customer experience side actually happen after we’ve already made the sale and taken a customer’s credit card number. For example, for most of our loyal repeat customers, we do surprise upgrades to overnight shipping, even though we only promise them standard ground shipping when they choose the free shipping option. In conjunction with that, we run our warehouse 24/7, which actually isn’t the most efficient way to run a warehouse. The most efficient way to run a warehouse is to let the orders pile up, so that when a warehouse worker needs to walk around the warehouse to pick the orders, the picking density is higher, so the picker has less of a distance to walk. But we’re not trying to maximize for picking efficiency. We’re trying to maximize the customer experience, which in the e-commerce business is defined in part by getting orders out to our customers as quickly as possible. The combination of a 24/7 warehouse, surprise upgrades to overnight shipping, and having our warehouse located just fifteen minutes away from the UPS Worldport hub means that a lot of customers order as late as midnight EST, and are surprised when their orders show up on their doorstep eight hours later. This creates a WOW experience, which our customers remember for a very long time and tell their friends and family about. “
What Tony is basically saying is that the key to customer satisfaction is providing a service level that exceeds their expectations. In online retail, this usually means delivering their orders unbelievably fast as a baseline, and not as a value-added service. This is becoming more and more the case all across the industry. Retailers cannot afford to lose this battle if they want to stay relevant in this new world.
A Micro Fulfillment Center (MFC) is a hyper-local, high-throughput, dense storage center where incoming orders are received, processed, filled, and delivered to the customer. The highly automated space-efficient MFCs are built for speed, scalability, and profitability. Their small footprint allows them to fit in dense urban areas and as a result, close to customers — shortening delivery time. Getting close to customers is a key differentiator for retailers selling online. This way, they can make sure they surpass customer expectations and provide them with the best experience.
I am privileged to be managing this revolutionary product at Fabric, the company that coined the term Micro-Fulfilment-Center. MFCs will revolutionize the retail industry in the next few years and will make a lot of customers satisfied, and most important of all — happy.
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