Fabric

Summary

Omni Talk Retail - Episode: Fabric

Release Date: January 11, 2025
Hosts: Chris Walton & Ann Mezzenga
Guest: Jonathan Murav, VP of Sales at Fabric

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Introduction to Fabric

The episode kicks off with hosts Chris Walton and Ann Mezzenga introducing the live coverage from the National Retail Federation (NRF) event, situated at Save A Lot's new micro-fulfillment warehouse in Brooklyn, powered by Fabric.

Notable Quote:

Chris Walton [00:04]: “We are kicking off our live NRF coverage on Saturday morning.”

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Fabric’s Background and Mission

Jonathan Murav provides an overview of Fabric, emphasizing its role as a fulfillment automation technology company aimed at solving significant challenges in the retail sector, particularly in on-demand e-commerce grocery delivery.

Notable Quote:

Jonathan Murav [01:00]: “Fabric is a fulfillment automation technology company focused on unlocking some of the largest problems in retail... profitable on-demand e-commerce grocery delivery for grocers in North America and globally.”

With nine years in operation and Jonathan himself nearing his sixth year with the company, Fabric combines technological innovation with operational expertise to address customer pain points effectively.

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Current Installations and Operational Insights

Fabric distinguishes itself by not only developing technology but also operating the fulfillment sites they build. This dual approach allows Fabric to deeply understand and address the challenges faced by retail operators.

Notable Quote:

Jonathan Murav [02:04]: “We actually started as a company that actually operates the sites that we build.”

Chris highlights Fabric’s hands-on approach, likening it to "eating what you cook," which fosters a strong alignment between product development and operational needs.

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The Brooklyn Warehouse: A Case Study

Standing in Save A Lot's Brooklyn facility, Jonathan elaborates on what makes this installation unique. Located in one of New York's densest areas, the 7,000-square-foot warehouse serves the entire Brooklyn population within a 30-minute reach.

Notable Quotes:

Jonathan Murav [03:17]: “We are surrounded by 2 million people. We are within 30 minute reach of 2 million people.”

Chris Walton [03:58]: “How big is this facility, Jonathan? And then also I'm curious too, like, how does, how do the dynamics of cold and fresh and all that.”

Jonathan explains that this is the world's first fully automated tri-temperature zone grocery facility, capable of handling ambient, chilled, and frozen goods seamlessly.

Notable Quote:

Jonathan Murav [05:29]: “It's the world's first floor, fully automated tri temperature zone, automated grocery facility.”

This setup significantly reduces labor costs by automating the picking process across different temperature zones, which traditionally require separate handling and increase operational complexity.

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Customer Process and Benefits for Save A Lot

Jonathan outlines the customer journey facilitated by this micro-fulfillment center. Customers place orders via Uber Eats, which are then efficiently processed and delivered within minutes.

Notable Quote:

Jonathan Murav [07:11]: “A customer will go on the Uber Eats application, find the Save A Lot storefront... the robots get to work to start collecting all the elements of that order.”

For Save A Lot, this innovation allows entry into the Brooklyn market without the high costs associated with traditional brick-and-mortar expansion, providing access to a large, dense customer base economically.

Notable Quote:

Jonathan Murav [08:39]: “This is truly like in terms of brand exposure, it's a brand new market for them.”

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Market Penetration and Addressable Market

The Brooklyn facility targets a substantial addressable market, with 2 million residents in the area and the capacity to handle approximately 350 orders per day. Even a low market penetration rate remains economically viable, showcasing the scalability of Fabric’s solutions.

Notable Quote:

Jonathan Murav [09:48]: “This site's designed to do about 350 orders a day... you can get to a very low percentage of penetration in the market and still make this a really compelling offering.”

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The Future of Micro Fulfillment Centers (MFCs)

Jonathan shares his insights on the evolution of MFCs, positioning Fabric at the forefront of this innovative industry. He anticipates significant growth and maturation as both technology and market readiness align for large-scale adoption.

Notable Quotes:

Jonathan Murav [11:03]: “We’re at this inflection point where both the grocers and the technology are now ready for meaningful scale.”

Chris Walton [10:32]: “We've seen a lot of starts and stops in the micro fulfillment arena... but this is really unique, really new.”

The pandemic's role in accelerating e-commerce penetration is acknowledged, increasing demand and compelling grocers to adopt more efficient fulfillment solutions to maintain profitability.

Notable Quote:

Jonathan Murav [12:06]: “The pandemic... accelerated market penetration for E-commerce grocery... it’s compelling grocers to start to move in a more aggressive way.”

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Impact of the Pandemic on MFCs

The COVID-19 pandemic significantly boosted the adoption of e-commerce grocery, raising penetration rates from 4% pre-pandemic to over 10%, with spikes in individual store performances. This surge has underscored the necessity for efficient fulfillment solutions like Fabric’s MFCs to support sustained growth and profitability.

Notable Quotes:

Jonathan Murav [12:06]: “Penetration rate was like 4% before the pandemic. Now it's like north of 10%, 12%. And during the pandemic, still growing high is like 25%.”

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Conclusion and Contact Information

As the episode wraps up, Jonathan Murav provides contact information for listeners interested in exploring Fabric’s solutions further. He can be reached via LinkedIn, email, or through Fabric’s website.

Notable Quote:

Jonathan Murav [13:58]: “You can find me on LinkedIn... or you can just find us on our website, getfabric.com and send us a message through there.”

The hosts express their appreciation for Fabric's insights and provide closing remarks, emphasizing the significance of the Brooklyn facility as a model for future micro-fulfillment centers.

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Key Takeaways

• Fabric’s Dual Approach: Combines technology development with operational management to create tailored fulfillment solutions.
• Innovative Facility Design: Fully automated tri-temperature zones enable efficient handling of diverse grocery items, reducing labor costs and increasing speed.
• Market Penetration Strategy: Enables grocers like Save A Lot to enter dense markets economically without the need for extensive physical storefronts.
• Growth of MFCs: Positioned at a pivotal point in MFC adoption, accelerated by pandemic-induced shifts in consumer behavior towards e-commerce.
• Future Outlook: Anticipates continued scalability and technological advancements in the micro-fulfillment sector, driven by both grocers’ needs and consumer demand.

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This episode provides a comprehensive look into Fabric's innovative solutions in the retail fulfillment space, highlighting how technology and strategic operations can transform grocery delivery, especially in dense urban markets like Brooklyn.

Transcript

[Chris Walton]

Hello, everyone. This is Omnitalk Retail. I'm Chris Walton.

[Ann Mazinga]

And I'm Ann Mazinga.

[Chris Walton]

And we are kicking off our live NRF coverage on Saturday morning. Ann, it's Saturday morning.

[Ann Mazinga]

We're getting the early bird, gets the.

[Chris Walton]

Grocery order, gets the robotic worm, I guess today. And as you're gonna see in a second, because we are kicking off our coverage from one of the coolest facilities we have toured in quite a while. Anne and I are standing right in Save A Lot's new micro fulfillment warehouse in Brooklyn that is powered by Fabric. And joining us today to tell us what it's all about. To tell all of you what it's all about is Jonathan Murav, Fabric's VP of Sales. Jonathan, welcome to omnitalk.

[Jonathan Murav]

Welcome to Brooklyn. Thanks for having me.

[Chris Walton]

Thanks, man. Yeah, I've only been here a few times. It's good. It's a good place to be, though, on a Saturday morning.

[Jonathan Murav]

Snowy Saturday morning, no less.

[Chris Walton]

Very snowy Saturday morning.

[Ann Mazinga]

Yeah. Well, let's start. Tell those who might be meeting Fabric for the very first time in this beautiful space. Tell our audience about Fabric and the company's kind of background.

[Jonathan Murav]

Yeah, sure. So Fabric is a fulfillment automation technology company focused on unlocking some of the largest problems in retail. More specifically, unlocking profitable on demand e commerce grocery delivery for grocers in North America and globally.

[Ann Mazinga]

And how long have you been working with Fabric? How long has the company been around?

[Jonathan Murav]

Yeah, so the company's about nine years old now. I've been going on my sixth year now with the company.

[Ann Mazinga]

So you've been through it for the whole journey?

[Jonathan Murav]

I've been around for a long time. I've seen it all great. It's been a great run. And have had leadership positions across operations, strategy, and now leading the sales organization.

[Chris Walton]

And tell us a little bit about where Fabric currently has installations, because we're going to talk about this one particularly because there's a lot of aspects that are unique. But talk about what you've learned over the course of the time at Fabric that's enabled you guys to put this installation in place.

[Jonathan Murav]

Yeah, So I think, you know, Fabric was founded as a technology company, but we're not only a technology company. So we actually started as a company that actually operates the sites that we build.

[Chris Walton]

Okay.

[Jonathan Murav]

So early on in the process, we built a very strong operating muscle and that what allowed us to do is actually feel the pain that our customers are feeling.

[Ann Mazinga]

The operators.

[Jonathan Murav]

Yeah, the operators are feeling. And take those learnings and put them back into our Product development from firsthand experience. Right. And I think that's a really powerful distinction that we have against some of the other folks that we compete with in the space. And you see that evident in the product that we've deployed. And our customers tell us, wow, this is exactly what we need.

[Chris Walton]

Yeah. So you're eating what you cook, so to speak.

[Jonathan Murav]

That's it? Yeah, that's it.

[Chris Walton]

We love that. We love people that eat what they cook. It's kind of our mantra here at Omnitok. All right, so we're standing in this pretty brand new Brooklyn warehouse facility that you guys are powering for. Save a lot. It's pretty impressive. You guys can see if you're watching like there's robots moving here behind us in the background. What is so unique about this site particularly?

[Jonathan Murav]

Yeah, so I think first and foremost we are literally in the heart of Brooklyn, New York, probably the densest part of. You know, we thought that when we.

[Ann Mazinga]

Were pulling up, our Lyft driver was like, do you know where you're going? He said, yes, we do know where we're going. Because yeah, there's restaurants, there's housing.

[Jonathan Murav]

We are surrounded by 2 million people. We are within 30 minute reach of 2 million people.

[Chris Walton]

Wow.

[Jonathan Murav]

Okay.

[Chris Walton]

Yeah.

[Jonathan Murav]

So this facility serves all of Brooklyn from this one location and walking down the street, you would never imagine that behind the two rolling gate doors that have graffiti on them, that there's this state of the art robotic automation technology that is fulfilling on demand 30 minute delivery to the whole of Brooklyn.

[Chris Walton]

That's crazy.

[Jonathan Murav]

Okay.

[Chris Walton]

Yeah. So this building looks pretty old too. Right? So why is that such an important factor here in terms of what you're able to do and where you're able to put this?

[Jonathan Murav]

Yeah. So we've designed a modular, easy to deploy system that can be deployed in what we call atypical spaces.

[Chris Walton]

Okay. Atypical spaces.

[Jonathan Murav]

So we were, we were designed or we designed the system to be able to be deployed in very dense urban areas.

[Ann Mazinga]

Okay.

[Jonathan Murav]

Backs of stores. Think like a big box grocery store anywhere across the country. And we also run the gamut. We could actually go into like very large warehouses. And so we go from what we call nano to kind of a more macro model. Right. And that's really interesting because when you start to think about solving for on demand grocery, proximity to your end customer is absolutely key. You can't do that in some large warehouse that's an hour outside of the city. Right, right. And so we built this system in a way that allows us to deploy it In a building that's literally 100 years old in the heart of Brooklyn.

[Chris Walton]

And how big is this facility, Jonathan? And then also I'm curious too, like, like how does, how do the dynamics of cold and fresh and all that.

[Jonathan Murav]

Yeah, great question. Yeah. So the facility is 7,000 square feet, which actually for us is a little bit larger on the nano side of the equation. Our true nanos run about 4,000 square feet and can drive kind of top line sales of $10 million a year through the system, which is really, really amazing. And I think what's really interesting about what we built here in Brooklyn, it's the world's first floor, fully automated tri temperature zone, automated grocery facility.

[Chris Walton]

And what does that mean?

[Jonathan Murav]

So what that means is that all of the goods are in automation, ambient chilled and frozen, all stored in automation and picked via automation.

[Ann Mazinga]

All in these bins behind us.

[Jonathan Murav]

All in the bins behind us across multiple temperature zones.

[Ann Mazinga]

Same size bins roughly.

[Jonathan Murav]

Yeah, yeah, same size bins, roughly frozen totes that keep the goods frozen, you know, indefinitely. And what that really allows us to do is drive a really lean model because where grocers struggle the most is pulling together all the disparate elements of an order from the frozen section of the shopping floor, from the ambient section, from the chilled section. And that takes a lot of labor and a lot of money. And that's where a lot of the losing economics of the online grocery model reside. And our tri temperature zone really cuts that down to a bare bones labor footprint. Wow. Yeah.

[Ann Mazinga]

Yeah, We've been in, in facilities similar to this before, but yet they were not. You could do the ambient goods, but it was, it was manual after that process. So it is really cool to see, you know, being able to have the same racks, the same kind of tote system set up for all three of those conditions. Well, I'd love to hear a little bit more about the process from the Save A Lot side. Like tell us a little bit about what SA Save A Lot's getting from this type of operation. And if I'm understanding correctly, like as a customer, maybe walk me through the customer process and then understanding like the benefits from Save A Lot's perspective. So I order through Uber Eats. Is that.

[Jonathan Murav]

Yeah. So the end customer is shopping exclusively on UberEats today. We'll probably bring on some additional marketplaces in the near future.

[Ann Mazinga]

Sure.

[Jonathan Murav]

So a customer will go on the Uber Eats application, find the Save A Lot storefront, hopefully listed right at the top. Right. And I think we're seeing that more and more. Now, which is really great because the customer feedback has been fantastic and I think Uber algorithms are picking up on that. And they'll do their shop like you do on any other application. Right. They'll pick what they want. That order comes into this facility, the robots get to work to start collecting all the elements of that order. We'll have pickers who actually select those goods at the station, making sure that the goods are of high quality, of precious quality to go out to the end customer. They bag them. And then right over here we have an Uber Eats driver who just arrived, literally just walked in, just walked in and within a few minutes they come to pick it up. You know, a typical order of 50 items gets picked within five minutes.

[Ann Mazinga]

So. And Save A Lot doesn't have a lot of bricks and mortar locations it in this area. So explain a little bit about what this is now enabling. Like if I'm an Uber Eats customer and I go on and I see that I have eggs and they're a good price and I'm ready to pull the trigger. And now I'm shopping Save A Lot and I'm.

[Jonathan Murav]

Yeah. So what this has enabled for Save A Lot is the ability to go into a market.

[Ann Mazinga]

Yeah.

[Jonathan Murav]

Literally the largest market in the country.

[Chris Walton]

Right.

[Jonathan Murav]

Which happens also to be the most expensive market in the country in a way that makes economic sense for them. Right, right. So if you think from a grocer's point of view, they need to now go into Brooklyn, if that's where they want to be.

[Ann Mazinga]

Yeah.

[Jonathan Murav]

Find two acres of land with a lot of parking spaces, you know, pay tens of thousands of dollars a month. Right. For that facility. And that just doesn't work with the Save A Lot business model as a discount grocer. Right, right. And so what we've given them the ability to do is enter a new market in an economic a way that makes economic sense to them. Get brand exposure to the large. In the largest market in the country.

[Ann Mazinga]

Yeah.

[Jonathan Murav]

And hopefully also drive like significant top line sales because they're in this really dense area where there's high demand for the types of groceries that they're offering to the market.

[Chris Walton]

So, Jonathan, so for context, where is the nearest Save A Lot store?

[Jonathan Murav]

It's about an hour from here. That's like two. And then beyond that it's like probably 10 hours away is the nearest one. So this is truly like in terms of brand exposure, it's a brand new market for them.

[Ann Mazinga]

Right.

[Jonathan Murav]

A lot of customer education has gone into it and after about 12 weeks now, we're happy to say that we're seeing like really compelling traction from the market.

[Chris Walton]

And what is the addressable market size that you think that you're able to meet from this type of insulation?

[Jonathan Murav]

Yeah. So, you know, there are 2 million people who live in Brooklyn. You know, we think we're probably interesting for at least six to 700,000, 600, 7,000 of those people. Now when you're talking about that relative to the volume that this site needs to get out to kind of meet interesting economics. You know, this site's designed to do about 350 orders a day.

[Chris Walton]

Okay.

[Jonathan Murav]

So there is just a lot, you know, very like you can get to a very low percentage of penetration in the market and still make this a really compelling offering.

[Chris Walton]

Right, right. It's super interesting. So, so last question we have for you, we'll get you out here on this because I think it's a good capstone question is, you know, we've seen a lot of starts and stops in the micro fulfillment arena over the last. Since we've been doing this eight years.

[Ann Mazinga]

Yeah.

[Chris Walton]

And. But it's always been something that we've been interested in, keenly followed. We've been interested to keenly follow it as well. This is really unique, really new. What is your take on the continued evolution of micro fulfillment as a concept? Where do you think it's going to go next?

[Jonathan Murav]

Yeah, so I mean, fabric's been at the forefront of this new and innovative industry now for nine years. I actually think we were the ones who coined and copyrighted mfc. Oh yeah, right.

[Chris Walton]

I have no idea.

[Jonathan Murav]

Patent pending. Yeah.

[Chris Walton]

No, no, I'll take your word for it.

[Ann Mazinga]

I'm kidding, I'm kidding.

[Jonathan Murav]

Don't fact check me on that. No, I think it's true. I think it's true. So we've kind of had a front row seat to the evolution now like any new industry and any new technology and any new innovation, it's going to go through its ebbs and flows in terms of maturity, rate of market adoption, first movers and then followers. Right. And I think, you know what we're, you know, I truly feel that we're at this inflection point where both the grocers and the technology are now ready for meaningful scale. Right. And now that's, you know, after a nine year journey. Right. And it's taken some time, but.

[Ann Mazinga]

Right. And I think like the marketplace adoption too has got to be up from the consumer side too, more so than it was. Where it makes it easier to go.

[Jonathan Murav]

Into a new Market demand, aggregation, marketplaces out there in place. Yeah, really amazing point. That's been a big boost as well.

[Ann Mazinga]

Sure, yeah.

[Chris Walton]

How, how did the pandemic impact things, good or bad, in terms of the evolution of the mfc?

[Jonathan Murav]

Yeah. I mean, obviously it accelerated kind of market penetration for E commerce grocery. First and foremost, it bought a lot of eyeballs to that segment. I think the penetration rate was like 4% before the pandemic. Now it's like north of 10%, 12%. And during the pandemic, still growing high is like 25%. And obviously on a store by store basis, you know, that penetration can go to 20, 30%. Right. So first and foremost, it just bought a lot of eyeballs to the segment, and that's created, I think, an impetus for grocers to start to move because this has become a more meaningful part of their P and L, which they can no longer afford to ignore because they're actually losing money on these orders. And so it starts to eat into their gross margins. And so now it's kind of compelled the grocers to start to move in a more aggressive way.

[Ann Mazinga]

And, Jonathan, is that something that you would say is one of the most important things when you're talking to new potential clients? Like, is that the most important problem that they're trying to solve right now and why they're kind of reaching out to fabric?

[Jonathan Murav]

Yes, I think, like, you know, in terms of, like, prioritization, I mean, first and foremost is how can I be more competitive and gain market share against the guy across the street?

[Chris Walton]

Oh, really? Okay.

[Jonathan Murav]

Right.

[Chris Walton]

All right.

[Jonathan Murav]

Two is like, how can I optimize my existing P and L and, you know, just make more with less, be more efficient. Yeah.

[Chris Walton]

So it's market share first and then profitability second.

[Jonathan Murav]

That's interesting.

[Chris Walton]

I wouldn't have thought that.

[Jonathan Murav]

Yeah. Because grocers are really concerned about, you know, how do they compete against, you know, the next guy.

[Chris Walton]

Right, right, right. Yeah. It's a very, very competitive space, without a doubt.

[Jonathan Murav]

Yeah.

[Chris Walton]

All right. Well, man, this was so awesome.

[Ann Mazinga]

Yeah.

[Chris Walton]

This is such a great kickoff to our coverage at nrf. It's Saturday morning. I mean, I imagine people are going to be watching this, probably going to want to reach out, get tours themselves, those that are here in New York, maybe even after the show, after the conference as well. For sure people are interested and they want to do that. What's the best way for them to do that? Jonathan?

[Jonathan Murav]

Yeah, sure. So you can find me on LinkedIn. Jonathan. J O N A T H A N Last name Morav. M O R A V. Find me on my LinkedIn, shoot me a DM. You can shoot me an email, jonathan.moravgetfabric.com or you can just find us on our website, getfabric.com and send us a message through there.

[Ann Mazinga]

Thank you so much.

[Chris Walton]

Yeah. Jonathan, thank you so much. Thanks for opening the doors to us today.

[Jonathan Murav]

We're happy to have you.

[Chris Walton]

Saturday morning in January in New York.

[Jonathan Murav]

It's cold in here, too, right?

[Chris Walton]

It's nice, but it's nice. It's very nice in here compared to outside. So thank you for opening the doors.

[Jonathan Murav]

My pleasure.

[Chris Walton]

It's been a great experience. Great getting to talk to you and Anne, as always.

[Ann Mazinga]

Be careful out there.