September 22, 2017
A lot has changed in recent years. Today, consumers want their products delivered now, or rather, yesterday. Perhaps more than any other industry, retail is being forced to adapt rapidly or pay the price.
Retailers must consistently deliver the right assortment of products as quickly as possible without passing any extra cost on to consumers. An IBM study revealed, 90 percent of consumers feel low or no shipping cost is an important factor when purchasing online.
As a result, traditional retailers are looking for options to increase sales and meet consumer demand in a cost-effective manner. One of those strategies is ship-from-store, a fulfillment solution that allows retailers to leverage stock from their brick-and-mortar locations and answer e-commerce challenges with more flexibility.
Ship-from-store fulfillment has seen adoption rates grow in recent years, and using retail stores as distribution points continues to evolve. The approach represents the convergence of supply chain, industrial real estate and retail strategies to best serve the customer with the right product at the right time.
It may not work for every retailer, but for some, ship-from-store fulfillment provides discernible advantages:
- Lower transportation costs and increase speed-to-market. Retail stores are typically closer to large population centers than distribution facilities. Filling orders from a local store can get products to a customer faster, at a lower cost to the retailer.
- Increase customer satisfaction. Consumers enjoy increased flexibility, choice and convenience as orders are fulfilled, regardless of the channel of origination, from an “infinite aisle” of products across all stores.
- Mitigate supply chain risks. Including stores in fulfillment networks adds distribution points to the overall supply chain. The impact of distribution being interrupted at one location is therefore lessened because stores can help compensate for any lost fulfillment capacity.
- Increase gross margins. Rather than putting an item on markdown in a store, a retailer can potentially sell that item at full price on its website. This can positively impact the profit margins of seasonal items, in particular.
- Increase inventory turnover. Instead of carrying excess inventory in both stores and distribution centers, retailers can assign items based on immediate and forecasted demand and in turn become leaner.
The seamless integration of physical stores and the virtual marketplace is what retailers are striving to reconcile as consumer shopping habits continue to evolve. While distribution networks vary retailer-to-retailer, the goal is to move closer to the omni-channel model of a flatter network, with transparent inventory, where stores also serve as distribution nodes offering direct delivery to the customer.