Ship-from-store Fulfillment a Must for Brick-and-click Retailers

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Implementing a ship-from-store fulfillment program may help mid-market multichannel retailers better serve customers and earn more profit.

This year, about one of every three brick-and-click, omnichannel retailers will have adopted a ship-from-store program, according to Forrester Research.

Target is reportedly shipping from about 1,000 of its stores, which is a bit more than half of the facilities in the chain.

Walmart is also known to have a well-developed ship-from-store strategy. In April 2017, Walmart even took this one step further and asked store associates to deliver packages on their way home from work. About 90 percent of Americans live within ten miles of a Walmart.

Target and Walmart are using ship from store to achieve two fundamental retail goals, including:

  • Improving customer experience with low-cost, high-speed delivery,
  • Boosting revenue and profit from more conversions, efficient inventory management, and better margins.

The same ship-from-store practices that help massive billion-dollar retailers will also work well for mid-market sellers with relatively few physical stores.

Ship-from-store fulfillment transforms a shop in the mall into a distribution center.

Ship-from-store fulfillment transforms a shop in the mall into a distribution center.

Improve Customer Experience

Shoppers expect mid-market retailers to provide the same quality customer experience as the best of the big retail brands.

This is true in a physical store. When a customer walks into a store, he expects a certain level of customer service, product selection, and courtesy, regardless of whether the shop is a single boutique, part of a regional chain, or store number 2,000 for a massive retailer.

Similarly, when a potential customer visits an online store, she expects a good customer experience, whether she is shopping on Amazon or a small Internet boutique managed from someone’s linen closet.

Like it or not, this probably means that almost every retailer should seek to provide low-cost or, better still, free shipping. And low-cost or free shipping needs to arrive quickly.

Last year nearly nine out of ten shoppers surveyed by Walker Sands, a communications firm, said free shipping was the best incentive a retailer could offer. Some 69 percent said one-day shipping was an incentive to shop online. Shoppers like free and fast delivery.

Online customers like fast and free shipping. For example, nearly seven out of ten shoppers surveyed said that one-day shipping would be an incentive for them to buy online.

Online customers like fast and free shipping. For example, nearly seven out of 10 shoppers surveyed said that one-day shipping would be an incentive for them to buy online. Source: WalkerSands.

A separate report from Deloitte found that about 42 percent of shoppers thought three-to-four day shipping was fast in 2016 down from 63 percent of shoppers surveyed the prior year.

Ship from store provides low-cost and high-speed delivery by distributing “warehouses” and effectively putting “fulfillment centers” relatively closer to shoppers.

Imagine a mid-market retailer with shops in New York, Chicago, Dallas, Phoenix, and Seattle. With those five shipping locations, most residential addresses in the contiguous United States are just a zone or two away.

A retailer with a less fortunate distribution of stores could still benefit from ship-from-store fulfillment and distributed warehouses. For example, imagine a brick-and-click retail business with five stores in Iowa. The chain could locate its primary ecommerce warehouse in the Nevada, put key items in a third-party warehouse in New Jersey, and use a couple of its stores in Iowa as distribution centers too. Collectively, these locations could quickly reach many, if not most, customers with relatively fast and cheap shipping.

Potential to Increase Profit

A ship-from-store fulfillment strategy may also boost profit, thanks to several retail advantages the approach provides.

More sales. Ship from store exposes on-the-shelf, brick-and-mortar inventory to a larger online market. A swimsuit stored in the stockroom of a Port Washington, Wisconsin sporting goods store on a chilly day in November might still be sold to an online shopper in Corpus Christi, Texas, where the average temperature that month is about 76 degrees Fahrenheit.

Efficient inventory management. A side effect of showing in-store inventory online is efficiency. Ship from store requires better inventory management. If you miscount inventory in the store, you could easily disappoint an online customer. Improved inventory management can lead to faster turns and better purchasing decisions.

Less inventory to carry. Rather than warehousing ecommerce inventory in a location that is isolated from stores and store inventory isolated from online markets, ship from store shares inventory across a retail locations. In some cases, this may mean that the merchant can carry less inventory overall.

Better margins. I’m aware of a retail chain in the northwestern United States that overbought on sock monkey kits. Before the chain took a deep discount to try and speed up velocity, it offered the sock monkey kits online and nearly sold out at full price.

Challenges of Ship from Store

Ship from store is not without problems. An omnichannel retailer that wants to reap the benefits described above will need to do a bit of effort up front.

Better inventory management takes work. To gain the efficiency and improved turns described in the section above, retailers may need to implement new inventory procedures or invest in new software and equipment.

Employee training. Retailers may need to either hire new employees to manage shipping or train existing employees. Employees will need to learn picking and packing procedures and understand how to balance the needs of shoppers in the store with the need to pack and ship quickly.

Physical space. Physical stores are not warehouses. Nonetheless, retailers will need to find room for packing tables, packing materials, and everything else that goes with fulfilling online orders.