Micro-Fulfillment Appears to Be Back on the Agenda for Major Retailers, Creating a Unique Opportunity for Automation Providers

Micro-fulfillment had a surge in interest during the e-commerce boom of 2020/2021, with many major retailers, particularly in grocery and pharmaceuticals, laying out plans for rapid urban fulfillment supported by localized fulfillment centers. But the strong return of in-store shopping and the high cost associated with building Micro-Fulfillment Centers (MFCs) dampened initial forecasts.

Over the last year, we’ve started to see a renewed push from both online and brick and mortar-based retailers to shorten the last mile and develop effective local fulfillment networks. The two key factors that have always dictated micro-fulfillment’s success are: 1) the volume of direct-to-consumer orders, and 2) the cost of building a micro-fulfillment operation versus the current last-mile setup. And with e-commerce continuing its steady rise and the price of automated material handling systems coming down, retailers seem to be finding a justifiable Return on Investment (ROI) to develop micro-fulfillment at scale.

• Symbotic acquired Walmart Robotics Business in January 2025: Symbotic acquired both Walmart’s Advanced Systems and Robotics business and signed an agreement to develop and deploy systems for Accelerated Pickup and Delivery (APD) centers at Walmart stores. Walmart is hoping to deploy over 400 APDs in the coming years.
• Woolworths Group Acquired Takeoff Technologies’ Assets in August 2024: Takeoff was a prime player during the micro-fulfillment hype years, but filed for bankruptcy in May of last year citing difficulty maintaining momentum and finding new clients. The takeover by Woolworths is part of the retailer’s broader strategy to enhance e-commerce and micro-fulfillment operations.
• Amazon’s Project Jupiter Expected to Launch Later in 2025: The initiative focuses on creating automated MFCs referred to as Local Vending Machines (LVMs) that Amazon will license the use of for companies in different industries, at a cheaper price than competitors. General availability is expected in 3Q/4Q 2025. In October last year, Amazon announced it would be launching its first automated MFC at a Whole Foods in Pennsylvania, enabling shoppers to add Amazon products to their order or pick up in store when shopping.
• Walgreens Increasing the Number of Stores Serviced by MFCs: In a 1Q 2025 earnings call, Walgreens mentioned that it currently has 11 facilities servicing 4,500 stores, with plans to increase this closer to 6,000. Walgreens previously paused this rollout to improve operations at existing facilities, mentioning that the MFC model it was working on was not as cost-effective as had been hoped. The renewed rollout of the plan indicates that many of the existing cost concerns have been ironed out.
• Save A Lot Opened an MFC in Brooklyn at the End of 2024: As part of the company’s plans to expand further into New York City, it partnered with Fabric and Uber to provide more on-demand grocery fulfillment.
• While at a much slower pace than originally expected, many of the largest retailers, including Giant Eagle, Tesco, and the Co-op, have all laid out plans to either leverage stores for online order fulfillment or develop standalone MFCs for curbside pickup options.

ABI Research expects MFCs to play a key role in e-commerce in the coming years, especially as more retailers try to reduce delivery times and manage increased online orders and returns, while also wrestling with limited warehouse space. And there’s a big opportunity for order fulfillment and automated solution providers to support this growth. Upon acquiring Walmart Robotics, Symbotic referenced that having an MFC offering opens up a roughly US$300 billion Total Addressable Market (TAM) in the United States alone. However, it’s important to understand when micro-fulfillment should play a role and when it shouldn’t.

As realism set in following the initial hype, retailers like Walgreens cited issues with both the operating efficiency of MFCs and the experience that stores had when playing host to a form of MFC. Store-attached MFCs are, by far, the desired choice over standalone MFCs, given that it leverages existing store footprints, but bringing in automated systems to fulfill orders and using stores as mini distribution centers needs to be able to resolve the issues that stores are already facing, not bring in additional challenges and workloads.

Upskilling retail staff, bringing in adjacent technologies (network connectivity, devices, etc.), and integrating an effective order management system are all major factors that will determine the cost efficiency of an MFC. And this is where the larger warehouse automation providers and System Integrators (SIs) could be stronger candidates to develop MFCs over the more dedicated providers like Takeoff Technologies. Grocery-focused automation providers like Symbotic and Witron have the industry expertise, but will need to be able to integrate smaller, more modular item picking Automated Storage and Retrieval Systems (ASRSs) if they are to operate in store backrooms. SIs that have operated in the e-commerce space have an advantage on the item picking level and should look to capitalize on this growing opportunity to unlock new revenue, particularly with larger retail customers that are at a more mature stage of their warehouse automation journey.