H-E-B is the leader within the grocery industry when it comes to leveraging automated micro-fulfillment centers (MFC) to fulfill online grocery and curbside pickup orders. H-E-B refers to their automated facilities as eCommerce Fulfillment Centers or EFC. H-E-B has a partnership with AutoStore™, a leading manufacturer of cube-based automated fulfillment centers.
The company is opening their latest EFC at a store located in Plano, TX. I’ve been to the facility many times including a few days ago to witness the progress being made. The EFC will fulfill eCommerce orders placed through the company’s website. The EFC is designed to allow employees to fill Home Delivery or Curbside orders vs. having employees roam the aisles fulfilling orders which increases aisle congestion.
Kedar Patel, vice president of eCommerce at H-E-B, said the Plano EFC will serve other stores in the area using a hub and spoke model. Online orders placed for curbside pickup will be filled at the EFC and then shipped to the customer’s store for pickup. Delivery orders will be delivered out of the EFC direct to customers. The Plano EFC is the first of its kind in North Texas, but the sixth in the company. Two of the EFCs are free-standing while four are attached to stores.
I consistently rank H-E-B as being one of the best grocery retailers in the United States. The H-E-B store located in Plano, TX is the most advanced grocery store in the world. The team from H-E-B deserves to be congratulated.
However, I believe H-E-B has an opportunity to do something very unique. Instead of only operating a small number of EFCs in Texas, H-E-B can become the leading automated fulfillment company in the grocery industry. Here’s how:
1. Acquire AutoStore.
2. Form a strategic partnership with Capstone Logistics, LLC, and/or make an investment in or acquire a percentage of the company. Capstone is arguably the best provider of inventory management, fulfillment, MFC operations, and last mile delivery services for the grocery industry.
3. Offer three options for the grocery industry.
a. Micro-fulfillment as a Service whereby Capstone Logistics will operate MFCs powered by AutoStore’s technology. Capstone may choose to utilize MFC systems from additional vendors as well. EFCs can be attached to stores or opened among a cluster of stores.
b. Micro-fulfillment as a Service but the retailer supplies their own workforce to run the facility and fulfill orders.
c. Build stand-alone EFCs capable of fulfilling online and curbside orders for multiple grocery retailers out of the same EFC.
4. Provide all retailers with an option for automated EFCs, not just grocery retailers. This is a growth opportunity for H-E-B.
If H-E-B pursues the strategy that I outlined, it will allow H-E-B to become the next Ocado. The Ocado Group is vulnerable. H-E-B has an opportunity to enter a new market and win.
Think BIG, H-E-B, think REALLY BIG.
