Last updated on September 18th, 2019 at 06:11 pm
The average consumer wants two things: fast order fulfillment and convenient fulfillment options. It’s a precedent set by Amazon and driven by the convenience economy – consumers expect products and services in real-time and on-demand.
For retailers trying to unlock value from their physical store locations, which continue to be plagued by closure, herein lies the opportunity. Business Insider Intelligence predicts that digital retail sales will reach $632 billion by 2020. With no signs of slowing down, retailers can leverage their physical spaces to support ecommerce distribution and execute rapid fulfillment.
Retailers that do not fulfill from stores will find themselves at a huge competitive disadvantage. Traditional retail fulfillment models using warehouse-only fulfillment are simply no longer viable for the long term.
Ship From Store Direct to Consumer
Never lose a sale
If inventory exists in the retail chain, there needs to be a way to get it to the customer. Your customers aren’t thinking about what is happening behind the scenes. Frankly, they probably don’t care so long as they get what they want. That’s why it’s so important to enable the sale of any item, whether at your store, another store, a warehouse or a distribution center (DC).
Satisfy the customer
One-day and two-day delivery is becoming the norm, but that is still time a product spends in transit versus in your customers’ hands. With ship from store, you have the ability to pick a fulfillment location that is closest to your customer. If you have a widely distributed physical footprint, this could mean a store is closer than your distribution center.
Greater stock availability
Distribution centers tend to be wide with inventory, but not very deep. They stock every size and color variant produced, but don’t have an infinite amount of units. On the other hand, stores usually stock product to cater to their geographic region. Stock usually reflects local trends and buying habits and is, therefore, more likely to align with what consumers want.
Lower cost of inventory
It is expensive to maintain inventory at a physical location, not to mention space within a store is sacred. However, you’ll never be stuck with aged inventory – which is a margin risk – if you can optimize it with the most productive products and distribute it to your online buyers.
Lower shipping costs
Shipping costs are the number one consideration for online shoppers. USPS found that 51% of shoppers always choose the cheapest shipping option. But things like free shipping can be a burden to retailers, especially in the many instances where faster delivery is also expected. You can mitigate the high costs by shipping across the fewest transit zones, especially when utilizing an order management system (OMS) with automated smart routing.
Perhaps there was a merchandising mistake, or maybe demand shifted mid-season. Either way, every retailer wants to sell inventory at full price. So, how can you move product and avoid markdowns? You can do so by incorporating store inventory into your web assortment and routing from stores that are about to markdown so the margin is not lost.
Ship from Store Considerations
Ship from store isn’t without its operational considerations. Here are a few of the things you should think about to make ship from store as valuable of an omnichannel fulfillment strategy as possible.
Staffing: Do you have the staff to handle pick, pack and ship activities? And will they be motivated to perform tasks not as directly connected to sales numbers? Fulfillment requires a different mindset than selling, so make sure you have the right store team in place to manage every aspect of the job.
Merchandising: Store merchandise is traditionally planned, allocated and replenished based on historical sales. Now with store fulfillment, buy online return in-store (BORIS) and endless aisle, you’ll need to rethink your approach. There needs to be a balance between inventory for “walk-in” customers and that in which you’re fulfilling from the web.
Attribution: Who gets credit for the sale if it’s bought online but fulfilled in-store? A similar question arises at the store level when commission is involved. You’ll need to do what’s best for your brand, but remember a sale is a sale – as long as it doesn’t go to your competitor.
Readiness: Your stores will need to present direct-to-consumer shipments in the same way as a distribution center. This will likely require incremental supplies, new processes and corporate oversight. Be thoughtful about the change management so it can help drive your business’s transformation forward.
Beyond the challenges, there are efficiencies to consider. Think like a warehouse to optimize picking and packing and make store fulfillment tasks more productive. With batch picking (also known as wave picking) associates walk through the store to pick multiple orders at once versus picking orders one at a time. Forward picking is also helpful – dedicate a special place in your backroom for commonly ordered or “hot” items to save your pickers time.
Immediacy Begs for Accurate Inventory
In order to offer modern fulfillment options like ship from store and even endless aisle, retailers need clear inventory visibility. Accurate inventory is hard. It takes a well-defined process, training, diligence and the right software. But it’s necessary, and without it, you won’t be able to fully benefit from omnichannel fulfillment.
Ship from store aligns supply with demand, but only if you have a single view of all supply sources – web, warehouses, distribution centers, other stores and third-party suppliers – and all demand sources, including orders and carts across channels. IHL found retailers are losing 3.4% of same-store sales due to out of stocks. This figure jumps to 9% for apparel retailers due to poor size and inventory control. It’s why it’s so important to know in real-time what you have on hand and what the active demand is.
Betting on Omnichannel Fulfillment
Many retailers are already putting their physical stores at the heart of fulfillment and delivery. In fact, large retailers like Target and Walmart are increasingly using stores as distribution centers. Target stores, for example, handled 80% of the retailer’s digital volume in the first quarter of 2019.
NewStore customer Outdoor Voices is modernizing its customer experience in a similar way. With 99% inventory accuracy thanks to RFID labeling, the brand has a real-time view as to what items can ship from different stores. Store associates can then efficiently accept the request and fulfill the order from an iPhone, getting it out to the customer much more quickly than if a warehouse sent it or if it was fulfilled in-store via a clunky computer system.
Enabling store fulfillment offers the speed and options consumers expect. Even more, it increases store productivity and inventory turns, and drives store traffic through pick-up orders. Simply put, it’s a must if you want to survive today’s modern retail world.