Urban Ecommerce Fulfillment Center Design

Urban Ecommerce Fulfillment Center Design

Ecommerce was already a major trend in the retail sector, but there has been a faster growth since 2020. This has increased the demand for services that support online sales, and fulfillment centers are now being deployed closer to the customer. According to a study by eMarketer, Global ecommerce increased by 27.6% in 2020, reaching a sales volume of $4.28 trillion.

This remarkable growth was possible in a year where global retail sales dropped by 3%, and a more modest growth of 16.5% had been forecast for ecommerce.
Considering that worldwide retail sales had a volume of $23.839 trillion, ecommerce represented nearly 18% of the market, up from 13% in 2019.

The rapid growth of ecommerce brings challenges, but it also creates opportunities in the 3PL industry. Customers now expect same-day delivery for many products, and in some cases even a 1 hour delivery.

Regional distribution centers cannot meet this demand, for the simple reason that they cannot be close to all customers. However, smaller fulfillment centers can be deployed in urban locations, relying on robotics to achieve dense storage and faster orders. These are called micro-fulfillment centers or MFCs.

Since micro-fulfillment centers are still an emerging concept, designing them while meeting local building codes can be a challenge. They are not addressed directly by codes, and developers must follow the applicable requirements for commercial and industrial occupancies.

Working with an experienced design firm like NY Engineers ensures code compliance and a quick project approval.

Micro-fulfillment centers offer several features that make them attractive for online retailers, and even for grocery store chains:

Using only a fraction of the space required by normal distribution centers.
Being located closer to the customer, shortening the last mile delivery.
Improved performance thanks to robots, which also reduce the space requirements.
Perishable products can now be sold online, thanks to the shorter delivery distance.
MFCs can be deployed in vacant commercial spaces that were previously used for retail, reducing their upfront cost.

According to a study by LogisticsIQ, the micro-fulfillment industry will have a value of $10 billion by 2026, and there will be over 2000 micro-fulfillment centers in operation. This technology typically allows five times more storage in the same space, while using automation to process 10 times more orders per week.

Micro-fulfillment centers have also become an attractive option for grocery and retail chains that have recently transitioned to ecommerce. Many of them lack experience with online order fulfillment and 3PL services.

While employees can pick orders manually from shelves in stores, this approach is labor-intensive and impractical when dealing with large volumes of online orders.
This approach can also disrupt the in-store shopping experience, since employees are constantly picking the same products on display for customers.
For example, a specific product may have limited stock, and the last unit can be ordered online exactly when another customer is about to purchase it in person.

A micro-fulfillment center can be deployed in an existing store, allowing online and in-person sales from the same location. However, a micro-fulfillment center can also be deployed in a darkstore - a store without customer interaction, used exclusively for ecommerce or to supply other stores. The term dark warehouse is often used when describing larger facilities, but the basic principle is the same: using automation to fulfill orders without customer interaction and with reduced human labor.

MEP Design for Urban Ecommerce Fulfillment Centers

A conventional warehouse needs abundant lighting for manual picking, enough space to operate heavy equipment like forklifts, and the corresponding charging systems. In other words, a warehouse can be considered an industrial installation. Thanks to robotics, these design requirements are eliminated in a micro-fulfillment center:

Depending on how they are controlled, robots need little or no lighting. Darkstores and dark warehouses are not necessarily in the dark, but the required lighting is much less than in distribution centers with manual picking.

Picking robots are much smaller than humans and forklifts. This allows less space between product racks, and a taller storage configuration. While a warehouse may need aisles wider than 10 feet, a picking robot only needs a few inches of space.

In a micro-fulfillment center, the electrical design is focused on robots and their control systems, instead of high-bay lighting and heavy equipment. Ventilation, heating and cooling requirements are determined mostly by the products stored and retrieved, since human occupancy is minimal. However, a basic principle of MEP design holds true for micro-fulfillment centers: smart engineering decisions during the design stage can lead to major energy savings over time.

Just like with data centers, which are expected to host business applications and files 24/7, a micro-fulfillment center must have a reliable power supply for continuous operation:

The workload of a single fulfillment center can increase to over 10,000 orders per week, and even one hour of downtime can be very disruptive.
Downtime also has a negative impact on customer satisfaction, since time-sensitive orders are likely to be delayed.

The MEP design of micro-fulfillment centers must consider a reliable backup power system, along with the electricity and communication needs of picking robots. Depending on the products stored, there may also stringent ventilation and refrigeration requirements.

The automated storage and retrieval systems used in micro-fulfillment centers often have a modular design, which makes them adaptable in terms of scale and layout. Being a major online retailer like Amazon is not necessary to invest in MFCs. Thanks to its compact and modular design, the concept is also viable for smaller retailers, including those who are new to ecommerce and 3PL services.

Depending on the needs of retailers with ecommerce platforms, micro-fulfillment centers can be deployed as:

Compact systems operating behind normal stores.
Darkstores, which are fully dedicated to online sales or supplying other stores.
Dark warehouses, in cases where retail or grocery chains manage larger sales volumes.

In general, a micro-fulfillment center is financially viable when a retailer has an online sales volume that justifies the implementation costs. The retailer must also have access to last mile delivery services that can match the order processing capacity, or otherwise there will be a bottleneck. The space requirements and physical layout are rarely a limitation for MFCs, thanks to the flexible design of automated storage and retrieval systems.

Conventional fulfillment centers have an open layout, needing plenty of space between product racks for human workers and heavy equipment. A regional distribution center can easily surpass 500,000 sf, and finding a suitable location in urban settings is unlikely.
On the other hand, micro-fulfillment centers can be deployed in areas smaller than 10,000 sf. The most compact systems use less than 2,000 sf, which means they can operate in the same neighborhood where clients are located.
This makes the concept attractive for grocery store chains, since the last mile delivery becomes simpler for perishable products.

Micro-fulfillment centers can also have a tower configuration, since robots can pick orders from tall storage racks with ease. In conventional distribution centers, the storage height is limited by the capabilities of human workers and heavy equipment. Also, aisles that are too narrow and tall cannot be illuminated effectively, but this is not a problem for robots.

The dense product storage offered by an MFC is very useful in metropolitan settings, where each square foot of land is at a premium.

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How Commercial Real Estate Developers Can Repurpose Buildings for Micro-Fulfillment Centers

The year 2020 was challenging for many business sectors, and this includes commercial real estate. A study by Deloitte Insights found that lodging and retail were among the most affected sectors, but the demand for data centers and industrial spaces actually increased. Many landlords are currently struggling with low occupancy, but vacant properties can be repurposed for the growing needs of ecommerce.

Thanks to their flexible design, micro-fulfillment centers can be deployed in a wide range of commercial spaces. This includes city corners with an area below 10,000 sf, creating hubs from where retailers can serve urban customers locally.
The capacity of an MFC can be scaled up according to the needs of online retailers, and a single MFC can be split to accommodate existing columns and walls.

Since micro-fulfillment centers rely on robots, they don’t have the energy needs of regional distribution centers and other industrial buildings. As a result, the MEP installations in existing commercial buildings can be repurposed without major changes. Unlike humans, picking robots don’t depend on potent lighting fixtures to process orders, since they are equipped with sensors and positioning systems.

A large commercial building can be repurposed for two of the main needs of online retailers: micro-fulfillment and data center services. A reliable electrical installation is critical in these cases, since retailers cannot afford downtime with the current demands of ecommerce.

Online purchases have become more popular among customers, and this trend was accelerated by the COVID-19 pandemic. In many cases they expect a 1 hour delivery, which is not possible for regional distribution centers. The last mile delivery is often the less efficient step in ecommerce, but retailers can shorten distances by deploying urban ecommerce fulfillment centers.