Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age. Hey everyone. Peter Crosby here from the Digital Shelf Institute. Fulfillment and supply chain have such a significant impact on both the consumer experience and achieving profitability in omnichannel. That's why we wanted to dig into the relatively new area of micro fulfillment. The ability to harness data about your consumers at a zip code level, and turn that into the right product and assortments, manage inventory and availability close to the consumer, and get them their product fast, is offering many companies reduced fees, improved inventory transparency and lower costs. Corey Apirian, CEO at Davinci Micro Fulfillment, join Lauren Livak and me to discuss micro fulfillment's place in an overall fulfillment strategy, and some examples of companies that are using it to shift to a more profitable, customer friendly and sustainable business. Corey, thank you so much for coming on the podcast to chat with us. We're really grateful.
Corey Apirian:
It's my pleasure. I'm super excited to be here. This is one of my favorite and best podcasts that exist, so I'm honored.
Peter Crosby:
Well, first of all, you need to listen to more podcasts, but thank you. At least in our sector, I would appreciate that, thank you. But there are some murder podcasts that my husband loves that you might want. But seriously, I mean, you have such an enormous wealth of experience in the merchandising space, and you were actually Amazon's first drop shipper in 2004, so we got stuff to talk about. Brands today, they're all struggling with fulfillment and trying to get closer to the customer, and make it profitable, and supply chain issues. There's so much going on, and you're in this space called micro fulfillment, which is a way that can help with some of those challenges that people are having with fulfillment. But I thought before we dive into the why of the value of that, how do you define micro fulfillment for your customers?
Corey Apirian:
Yeah, that's a great question. I define it as a miniaturized fulfillment center in a hyper-local area. The word miniaturized is very relative, Gopuff and DoorDash may operate a 5,000 square foot MFC, micro fulfillment center. Amazon has 75,000 to 150,000 square foot MFCs, in comparison to their 300, 500,000 square foot fulfillment centers, and four million square foot mother ships. I like a 35 to 50,000 square foot location for Davinci's purposes, for a variety of reasons. And a lot of it really comes down to opex, operational expense, and essentially inventory control becomes the ultimate thesis of micro fulfillment, and how you get goods closer to the customer. And that's something that we'll unpack a lot here today, I think.
Speaker 3:
And Corey, when you think about how micro fulfillment and just fulfillment in general has changed in the past few years, what are you seeing from brands? And more importantly, if you look back to 2004 and what happened in Amazon and what's going on now, what is the change happening, and why do you think it's happening?
Corey Apirian:
I worked for a wholesale distributor in 2004 who was one of three companies that Amazon asked to start fulfilling product in their home and garden division, and personal care electrics, and consumer electronics. So there was maybe about, out of those subcategories, three to six different distributors. And the reality is, brands are the ones asked to do the heavy lifting, but they're terrified of single piece eaches and single piece returns, and their systems aren't really meant for that, right? They're moving master cartons and pallets and truckloads, and their ERP environments, their SAPs, their oracles are really designed around that bulk movement of goods into a modular at retail, at shelf. And in the 2004 era, you had to sell it to somebody for them to break it down into fulfillment of eaches in most cases, in order to sell online.
And Amazon designed a lot of their system in their vendor central world specifically around Walmart. So they mimicked what it looked like from a brand to a Walmart, or a Target FC. And a lot of early operations leaders at Amazon were Walmart operations leaders. So it makes sense when you think of that evolution. But when you think about pick and pack, most people in a very complex distribution center, in one to maybe three areas around the country, max, for 15 plus years. And it was usually one, right? It was usually one really large distribution center that moved eaches, bulk cases, pallets, et cetera. And that complexity equals cost. So when you think of the evolution and you think of how 3PLs existed and distributors existed, and how brands shipped into Amazon FCs, and then you had all these other retail channels of walmart.com and target.com, with these massive extended assortment businesses, outside of what's inside the four walls in the brick and mortar and the modular shelf.
Each one of these channels became a different need on how to sell to them, which is one of the reasons the merchandising component of micro fulfillment, and specifically what Davinci does, is so critical, because there's a different selling style and assortment of how you sell to an omnichannel retail, how you sell to Amazon Vendor and Seller Central, how you sell to a marketplace, including in that seller central world, but others. How you sell to D2C and Shopify. And when you look at the entree of marketplaces and you look at the entree of D2C, these became new nuances for either digitally native brands, who are only selling in those channels, or brands that were starting to build those relationships with their end consumers through those channels, or marketplaces when brands are trying to control a price, or take advantage of a global trillion dollar market.
But is marketplace better than drop ship 1P for a brand? I think that's a very specific conversation. I think it depends on the ecosystem and all these things. So it becomes this totally connected environment, this connected ecosystem. And micro fulfillment is that evolution of at least getting closer to the customer, so you can understand from a hyper-local perspective what zip codes, and categories, and regionalities, and seasonalities are you really servicing? And then you can work backwards and figure out how to service them in the most efficient way.
Peter Crosby:
That's-
Speaker 3:
And Corey, I-
Peter Crosby:
Oh, go ahead Lauren. I'm sorry.
Speaker 3:
I just want to make one clarification just to make sure everyone listening is familiar with eaches and inners and some of the language, because I know that's sometimes learned if you're new to supply chains.
Corey Apirian:
So there's a master, an inner, and an each, and there's probably a different UPCG10, some sort of item code specific to each one of those. Or in some cases it might be the same, which adds even more fun to the channel. And when you talk about Amazon and department stores, and other channels, you really only could have one UPC per ASIN, per Target ID, per Walmart ID, so on and so forth. So that becomes its own challenge. And one of the things that Davinci has done is we have designed an order management system in order to enable these infinite permutations on these differentiated channels.
So you're not selling the same item to every channel, and you have the ability, especially as a CPG, to differentiate and break out these different permutations based on market basket analyses and demographics, so that you can merchandise, but then you can continue to replenish and get inventory closer based on what I call this network optimization of how you get goods closer to the end consumer, off of the similar master carvings and core componentry. So you're creating density for brands, and then ultimately density for the carriers and end consumers.
Peter Crosby:
That's really the mind shift that has happened. I know to me personally, I'm sure for our people that are in it every day, it's not such a big shift, but the idea that fulfillment is not just logistics and being able to send something, it's actually a merchandising challenge, and an assortment challenge. And so when you think about micro fulfillment with that holistic sense of what it actually represents to both distribution partners and the brands' customers, retailers, et cetera, and then ultimately the consumer, why is micro fulfillment a great option for brands in that context? And what are the things that they need to be thinking about, in terms of its place in their overall go-to market?
Corey Apirian:
Yeah, micro fulfillment's really all about forward deployed inventory. So you would use like a CFC, or a centralized fulfillment center, or a distribution center as your storage. I don't love the word hub and spoke because it's got some different connotations for certain people that I think might... But it might be not as specific here, but it's probably the best representation easily for people to understand. You have these large distribution centers going out to these micro fulfillment center hubs where you're utilizing sortation, and this forward deployed inventory model to continue to get closer to the customer. And when you think about some of the pain points in the industry, you talk about urbanization, you talk about getting closer to the customer in terms of data sets and understanding product assortment and variety.
You talk about inventory control and replenishment challenges. You talk about really understanding that the last mile is the most expensive mile in the chain. So getting closer to the customer is really the opportunity. And people want stuff fast, but more importantly, they want stuff precise. So when you go back to this hub and spoke concept, it's really all about precision, and it's all about inventory control. And when you think of, just to unpack what I said earlier, on a simple hub and spoke model, getting inventory closer to the customer, and deploying it out for precision might have different connotations. So if you're using a local carrier who's doing same day next day deliveries, it's hard to control the speed of that unless you're managing that from that sort center specifically. So again, getting... Sorry.
Peter Crosby:
No, I was just saying because so much of what's become, when I look at what a lot of the industry analysts, the Gartners, Forresters, particularly Emily Pfeiffer at Forrester, writes really thoughtfully about this. That what's on the top of the list for this industry is really inventory transparency. That the ideal experience is that a consumer in the moment, or a B2B buyer, can know instantly when they're going to get their thing, and they care somewhat less about it get there fast, and that it get there when you said it would get there. And that's, I understand, beneath the surface, very hard to understand. And I would imagine that micro fulfillment makes it easier to get-
Corey Apirian:
It does.
Peter Crosby:
Clarity on that, right?
Corey Apirian:
That's the exact thesis here. And Amazon came out with some news a few weeks ago that launched, I think The Wall Street Journal covered that, about how they basically were building all these same day facilities that were 75,000 square feet, and everybody went crazy over that. And I think the story there is actually not that it's a same day facility. Same day, to your point, Peter, that's just a byproduct of them getting closer to the customer because it's the efficiency. But the story there is that they just returned 30 million square feet of 500,000 square foot buildings, and they went out and got these 75,000 square feet locations, because the opex was way too expensive on those larger buildings. And it was too much for even their capacity, which they have 50% of the US volume. So if it's too much for them, obviously we're onto something here.And Target used their stores as micro fulfillment centers and now just invested in all these mixing centers, and sortation centers.
And the whole premise of all of those things is for precision and speed. And it really comes down to a lowering of your opex, because it's not profitable to do it really any other way. So when you think of this hub and spoke model, your A items, your children's Tylenol, if you think about a CVS, that's always on the shelf in your neighborhood CVS. You can go to any CVS really in the world, and you're probably going to find children's Tylenol, or at least in the US. When you go to a hospital and you break your leg, you're not going to a CVS Urgent Care for that. That's more specialized, right? So you think about from an inventory perspective, a CFC is going to hold your like C and D SKUs, and your micro fulfillment centers are going to hold your A and B SKUs, and the C SKUs that ship a lot with the A SKUs, and the C SKUs that ship a lot with the B SKUs. So inventory management becomes, again, this complete thesis here of how you manage micro fulfillment, in my opinion.
Speaker 3:
And then also, and you mentioned this a bit before, but I just want to double click on it a bit. It enables a better assortment planning, right? So you can also do things like gift packs and different combinations that you might not be able to do in a traditional setting because the logistics and the agility to be able to do that just isn't there, right? You can't make those changes that quickly. Can you talk through maybe how from a brand perspective they could think about doing something like that with micro fulfillment?
Corey Apirian:
Yeah, absolutely. And this, again, goes back to understanding these hyper-local zip codes and buying habits. And when you're merchandising and selling to an agnostic channel environment, your Amazon direct fulfillment versus your Target drop ship, versus your Walmart marketplace, versus your Shopify D2C. And you can see all this realtime data set of what's happening, and then you're able to create AB testing or test and learn that are speaking to the demographics of those different channels. You might have Target and Walmart as mass retailers in the same pack. You might have Amazon in a different pack size, keep them outside of it. You may have your club channels in a much larger pack size, or variety packs of much larger pack sizes, however you end up merchandising that. But if you think about a large centralized fulfillment center, and not having the right order management technology to manage that, you're looking at a needle in a haystack to go get two inventory sets and consolidate them.
Which when you have 500 people, 300 people in a building and you have all this traditional racking and mechanized equipment and things like that, it becomes very hard to manage inventory. It becomes very costly and inefficient to be walking from one end to the other. And that's where automation and robotics really comes in, in the use of a micro fulfillment center. So not only are you creating more capacity and throughput, but your inventory control becomes a lot easier from a process of decanting inventory into an automation system, and then having a picking system automate bringing goods to a person for packing, right? And that's why you hear a lot about automation combined with micro fulfillment in a lot. In the back of a grocery store, and in different distribution centers, and different MFCs, right? Automation's a critical component, but if you just think of the sheer cost of automation inside of a 500,000 square foot building, or a million square foot building, you're talking about tens of millions of dollars worth of expense.
So not everybody can afford to do that. But when you look at it from a micro fulfillment center, you can get a larger return on your investment when you're automating a smaller footprint building, when you're getting closer to the customers. So you have less labor, you have less utilities, you have less equipment, you have less freight costs, and you get to have a very large assortment of products. But you're utilizing these inventory sets in a very smart and efficient way, when you're giving customers that shampoo and conditioner set that they can't get at the Target shelf, because they know that that 16.9 ounce of shampoo has been on that Target shelf for 20 years and their cost per cube and their cost per turn has just been what it is for that long. But online, the customer wants a two-pack of shampoo, and a one pack of conditioner because of their own usage. So by understanding those buying habits, and seeing that data set, you can cater something to them that's very different, and utilize online to drive inline, and so on and so forth.
Speaker 3:
And also, if you bring it back to a profitability standpoint, if you have a different assortment, you're also combating a lot of the price matching that happens between Amazon, Walmart, and Target because you're not selling the same exact product. So not only are you saving money from a micro fulfillment perspective, but you're also saving from a price matching perspective, because you're selling different products on different retailer sites.
Corey Apirian:
And that's something, for the past 20 years, that I've been doing very uniquely with brands that I've helped. And I will say that's one of the single biggest reasons of why Davinci has been designed this way, is to give brands that control, to enable that, and to protect themselves in a way with these very precise feeds of inventory and assortment planning that really ultimately benefits them and their retail partners in such a great way, right?
Speaker 3:
100%. And it-
Corey Apirian:
You don't need to go to sell to a distributor anymore. You don't need to go jam things into Amazon fulfillment centers, or hope to maybe get a purchase order on a new ASIN that you're creating a bundle for, and have to waste all these resources to pick and pack it, and tie up expiring goods. And maybe it doesn't sell, so now you got to rip it all apart and throw the inventory out, because it's all expired.
Speaker 3:
And from a profitability standpoint, especially nowadays, brands need to find these little ways where they can save money. So this is a great opportunity from a fulfillment perspective and a price perspective. And so Corey, a lot of brands maybe might say to you when listening to this or when talking about micro fulfillment, that they already have a large fulfillment team and it's part of their supply chain, and why would they add on micro fulfillment, and change the process that they're doing today? Or would they need to replace everything that they're doing? Or is this just an add-on? How would you answer that, if a brand came and asked you that question?
Corey Apirian:
Yeah, I mean, the answer really is looking at the data, and it's understanding where do you have ways to save money and create incremental sales? And micro fulfillment is likely going to unlock a lot of those things. And I look at the ecosystem as Amazon and, not Amazon versus. And when you think about that, it's like, "How do I continue to manage Amazon and my other channels in a way where I'm getting closer to the customer?" And I think the answer is, most brands aren't going to go out and invest in 15 micro fulfillment centers across the US, or 20 micro fulfillment centers, or whatever it is. There's 14 cities in the US that create next day coverage 100%. Today, Davinci has six buildings over 85% of the US, next day, 100% two day.
So when you think about our network, and there's others out there that have multiple facilities, brands should be figuring out ways where they can have the right order management technologies, by really helping to quarterback what's closest to the end consumer. So if you can create density and inventory, if you can create integrations with all these channels and marketplaces, it becomes very possible for a brand to utilize one or two of their buildings, and then basically mix in other micro fulfillment centers across the network to service additional channels, whether that's Davinci or somebody else. I think most large brands, enterprise brands that I talk to, and even many others, you don't have to be an enterprise brand to think this way. They want to focus on their core competency, and most of their core competencies are either digital marketing, or product design and development, and brick and mortar, and pulling products through end-to-end.
And maybe they have inventory forward deployed from their distribution centers, but they're not set up for pick and pack, right? And they don't want to be it. It's a totally different skill set. It's not their core competency. It goes back to that distribution center versus micro fulfillment center. They're just two different animals really. So outsourcing that piece of it to somebody that is really focused on forward deployed inventory, and fulfillment of eaches again, your single piece units, is a really big deal, and most brands want to be able to do that. So their fulfillment teams are one piece of the equation, but their technology teams, their e-commerce leadership teams, their finance teams, like Understanding Tax Nexus, all of these different components, like their demand planning teams, are so connected, but they don't have the tools yet to be able to manage that. And I don't think they want them in many cases.
Speaker 3:
And it's not like a rip and replace, it's like you're enhancing what's already happening.
Corey Apirian:
It's not. Yeah, that's exactly right.
Speaker 3:
And I think that's an important thing to call out, because it also enables test and learns. You were already talking about that where, hey, can we try a micro fulfillment center? Can we test and learn? Can we see what data we can gather from it, to then better understand our assortment and how we should be planning, and then expand from there? Would you say that's a good strategy to jump in and star?
Corey Apirian:
Test and learn is one thing, but I would say the most important thing right now, especially when you look at Amazon, Amazon's really hard to work with by shipping 100% of your goods in vendor or seller central, and maintaining bulk environments only with Amazon, right? FBA has punitive metrics on turns and inventories. Amazon 1P has weeks of cover issues that everybody's been dealing with right now. Transparency program, hazmat program. I mean, there's all these different things. Freight allowances are getting higher, getting inventory set up and moving on new ASINs, the famous crap list. Your can't realize a profit list. So fulfillment, and direct fulfillment specifically, especially when you're positioned to deliver goods in one to two days across the US and you can enable a prime badge through performance on direct fulfillment, you get control, you get backup supply on your inventories. I mean, backup supply itself is something that I've done for close to 20 years with Amazon, and it's such an important piece of the business.
10 to 20% of volumes would likely come from backup supplying your top ASINs with direct fulfillment, by just having them feeding inventory. That's a huge number. When you're thinking about marketing, and you want to talk about low hanging fruit of maintaining inventory, we all know how the inventory algorithms work at Amazon. When you're spending money on digital marketing, the second you go out of stock, that's a problem. So if you're always in stock and you're always controlling that, and interoperating your bulk business with direct fulfillment, and then utilizing that as an anchor to then create these differentiated bundles, or long tail goods, or anything that has an SIOC fee, or, again, is a hazmat item, a unique ground deliveries, and Amazon doesn't have a lot of space for that, or whatever the instance might be. You now get control and agility as a brand, and you can do things and pull levers at different times that are really important to your business, without being beholden to a vendor central PO on a Monday or a Wednesday, right?
Peter Crosby:
Wow. You're talking about a lot of pain in that, that needs to be solved in that line. So I love what you're talking about. Let's bring it to life for our listeners. Do you have an example of a brand that you've worked with, where you've seen this kind of business value from introducing this strategy?
Corey Apirian:
Yeah, multiple. I mean, we have a very large water company who, I'll keep the brand name confidential for the purpose of this, but one of the largest water companies out there. And they moved 100% of their inventories over a year ago into Davinci's network for direct fulfillment. And that's a scary thing to do, to just pick up everything from Amazon. But on the other side of it, there was SIOC fees, there was erratic ordering, there was-
Speaker 3:
Just to clarify for the audience, SIOC is ships in own containers, sometimes also referred as SIOC, just because I want to make sure all the acronyms are good there. Sorry.
Corey Apirian:
Fair point. SIOC in the early days is ingrained into my brain, and so many people call it SIOC now, and it's just... Yeah, it's one and the same. But yeah, thank you for clarifying that, Lauren. Appreciate it. And ultimately, all of these fees, the shortages, the chargebacks, all of these things can add up on your P&L in a really inefficient way. And when you're talking about water, you can have a high weight, low value item like a beverage, and that could have a very high freight allowance when going into Amazon's FCs as well.
So for direct fulfillment, by putting inventory in all of Davinci's locations, in the right quantities at the right time, we were essentially able to increase this brand's sales last year over 15%, year over year, and drop well over 12% to the bottom line just by removing all of the other fees that existed. So there was a 20 plus percent net margin improvement on this particular brand, and basically all we did was just keep them in stock the entire time and move it to direct fulfillment. Now, I'm not saying every brand should move 100% into direct fulfillment, but that's just one specific example of how powerful that could be.
Peter Crosby:
Got another one for me?
Corey Apirian:
Yeah, absolutely. I have a lot of them. There's another brand that's in the textile space, that historically had shipped into brick and mortar for 30 plus years, and we launched a different set of bath towels, hand towels, and washcloths on target.com. And we took those core components of receiving containers from their factories into our MFCs, and started shipping them and building these bundles out on Target, Walmart, Amazon, and so on and so forth.
And on Target specifically this six piece set of bath towels, hand towels, and washcloths did so well that within 90 plus days, we started ordering direct containers from the factory, of ships in own container towel sets that are now their top selling item. So we reduced all of that carbon emission, that waste of corrugate, we created more density and profitability for them by getting more goods into the container. And we created a new SKU out of thin air, really, for target.com, that is not sold on any other channel, other than there right now.
Peter Crosby:
And to Lauren's point, so much of this in the current period, getting this business profitable now that the testing of the digital shelf is over, and the jury's in for the fact that it's an important part of the business moving forward, it needs to be rationalized like everything else. And so to hear success stories like this in this sort of complex setting is, I think, really important for this next period, where profitability and rationalizing the business becomes super important.
Corey Apirian:
I fully agree with that. I think one of the things that sets Davinci apart as a fulfillment company in general, we utilize micro fulfillment centers because it's a very efficient and cost-effective way that we can pass through to brands, and be very purposeful, and a very purposeful set of tools for them to enable growth within their ecosystem. But I think at the end of the day, brands need to sell on drop ship, D2C, and marketplace channels, and they need to have agility to be able to do that. And the only way, in my opinion, you can do that, is with a combination of technology and a physical location network, however that happens, right? I'm obviously partial, Davinci's built that out, and we're helping brands every day with this, but that doesn't mean we're the only game in town. But brands need to have control and agility, and ultimately they need proximity to the end consumer.
And to your point, Peter, we have seen this movie for a while now, and a lot of the testing is done. You can still test and learn. I think e-commerce is an amazing place to test and learn, but there is a core assortment online that you can optimize through micro fulfillment centers. And back to the CVS example of children's Tylenol that I was giving earlier, I mean, Urgent Care in CVS is the brick and mortar format of micro fulfillment. By having online MFCs being supported for forward deployed inventories and precise, same day, one day, two day deliveries, depending on what the consumer's needs are, I mean, that's the future. That's where things are moving to. You're seeing Walmart and Target and Amazon all opt in. We just happen to be one of the games that are doing it for brands who operate in these multichannel fulfillment environments.
Speaker 3:
And I also think, you had mentioned it briefly, but sustainability is also a factor here. And I think for a lot of brands and a lot of organizations, as a lot of legislation is changing globally around the world, and they're thinking more about sustainability, when you talk about ships in own container, and creating different gift sets, and just packaging differently, and shipping differently, that's also something to consider when you're thinking about micro fulfillment. Would you agree with that as well?
Corey Apirian:
I would fully agree, and it's one of the reasons that I started Davinci, truthfully. I mean, just think about carbon emissions itself with the parcel carriers. I mean, 95% of the country's volume is still delivered by FedEx, UPS, post office. But when you're optimizing a zone two delivery, which is the best you can get with FedEx and UPS, and they're going from Cali to Cali, and just a zip code within instead of Miami to Seattle, in the most egregious example, think about the different stops that the truck has to go on and the different sortation centers and all the different things that are happening in those environments that are negative to sustainable practices. And then when you think about micro fulfillment on a D2C channel specifically, you can start to enable reusable packaging.
You don't need the same amount of corrugated when you're going from point to point deliveries, which are typically anywhere from zero up to, maybe at max, 70 miles around a micro fulfillment center. And typically that's zero to 30, or zero to 50 for most of the local carriers that exist. And that becomes a really profitable and sustainable and safe delivery. Talk about reverse logistics in that same breath, over 25% of the trillion dollars wasted in reverse logistics globally is due to damaged products being shipped by the carriers. I mean, we've seen customers call up or send an email into some Shopify stores that we service, with a certain parcel carrier literally kicking a box of beverages down a driveway to a customer's doorstep.
Peter Crosby:
Oh my gosh.
Corey Apirian:
And that's the most egregious example, but that is a real thing. And a gig economy worker may or may not still do that, but at the end of the day, the chances of that product getting damaged on a sortation belt, or thrown on and off a truck, that's going to improve the safety of those different product types.
Peter Crosby:
Yeah, I remember, Corey, when I went through your LinkedIn and just got to know you a little bit, one of the posts that stood out to me, I think is now maybe two years old or maybe more, but you were celebrating your first year in business at that time, and it's a picture of you facing towards one of your fronts of your buildings with your infant son in your arms. And when you think about that, the role that this can play in that drive to make sure the next generation can actually live on this planet, I just thought that A, that picture was incredibly cool, and how proud you are of what you're building for you and your family. But also hopefully to have a positive impact on the world, I think, is great.
Corey Apirian:
I won't lie, there was a little bit of a marketing spin there too. His name is Leo, and one of the reasons we're Davinci.
Speaker 3:
Oh, I love that.
Peter Crosby:
I love it.
Speaker 3:
That's so good.
Peter Crosby:
Is he painting any ceilings in your house yet?
Corey Apirian:
No, not yet. Not yet, but he's a great builder, so I'm sure he will one day.
Speaker 3:
That's great.
Peter Crosby:
That's amazing.
Speaker 3:
Corey, can I just ask one question before we close out? And I'm just curious, this might not apply, but are there any specific categories that might see maybe more benefit from micro fulfillment? I'm thinking refrigerated goods, or food, or maybe chocolate that melts, right? Is there any specific category where you've seen micro fulfillment just be much more important, because of the zero to 70 miles type of thing?
Corey Apirian:
I think that's such a great question. I segment it in four different quadrants. There's low value, low weight, high value, high weight, and the combination of the two. If you're going to talk about where does micro fulfillment benefit a brand specifically in a category, I think you can make a really strong argument against each one of those categories from a profitability, a sustainability, a safety of delivery, the speed, meltable, right? All of those things are critical. However, they each have their own place in it. And I think when you talk about even large furniture and major appliances, there's a last mile cost on those items that you need to have something closer to the consumer to enable that, right? But those products are really big. So micro fulfillment centers and holding them for more than a day's time is a really challenging thing.
What I have seen from all the analyses that I've done is that the biggest benefit is probably in the CPG category. When you have this low value, low weight item, even though that's a... I would also add the low value, high weight items, like beverages, too. To take a step back, low value, high weight items and beverages, in my opinion, micro fulfillment is really one of the only chances for survival or profitability for that category of product type. When you talk about CPG in general, like core SKUs that are sold historically at drug and mass and club and Amazon in those CPG categories, the large players that all use your tools, and folks that have been selling in brick and mortar for so long, and have translated so well online, the ability to understand the consumer at a zip code level demographic, and to be able to get goods fast into their hands, whether it's OTC, or snacks, or food. Meltable and frozen foods is obviously a big component of that too. I think micro fulfillment is really critical for those businesses.
Peter Crosby:
Corey, thank you so much for bringing all this knowledge and passion for the area that you work in. I know it's a big focus of our listeners' agenda over the next year or so, to just, like we said, rationalize every piece of the business that can be, to drive towards a more profitable and sustainable business. So I think what you've shared here today is really cool. Just want to let our listeners know, it's davincimicrofulfillment.com. Davinci, as mentioned, is Leo's inspiration and painted a nice Sistine Chapel ceiling. So that's how that's spelled, and if anyone wants to get in touch with you, of course there's also LinkedIn for them to reach out and pick your brain. So thank you for bringing, like I said, your passion and innovation to our listeners. We appreciate it.
Corey Apirian:
Thanks so much for having me. This was awesome. So much fun.
Peter Crosby:
Thanks again to Corey for bringing the potential of micro fulfillment to us. For more, please swing on over to digitalshelfinstitute.org and become a member, to keep up to date on the DSI. Thanks for being part of our community.
