Today’s consumers demand ever-higher levels of flexibility in the shopping experience. Whether it’s returning online orders in-store or picking up orders via curbside pick-up, expectations for customer-centric retail are firmly in the mainstream. And with Amazon wielding huge influence over what qualifies as ‘fast’ delivery speed, it’s never been more challenging for retailers to keep up with competitors.
This is where implementing a ship from store fulfillment strategy can make all the difference to your ability to achieve rapid delivery and increase customer satisfaction. By embracing the power of omnichannel fulfillment, retailers can gain a competitive edge and keep shoppers coming back.
So what is ship from store fulfillment, and how can your business implement it effectively?
Ship from store is a store-based fulfillment model where a physical retail store uses its own inventory to fulfill online orders and ship them directly to the customer, rather than using distribution centers. This differs from BOPIS (also known as ship to store) or curbside pick-up, where customers are responsible for retrieving their order once completed.
In essence, ship from store strategies transform storefronts into omnichannel locations that serve both your in-store and online customers. Stores are responsible for the end-to-end fulfillment process, including picking, packing, labeling, and shipping products.
Once a niche practice, the COVID-19 pandemic has accelerated the shift towards store-based fulfillment. With physical retail off-limits for large stretches of 2020 due to lockdowns, consumers turned to ecommerce to meet their needs.
Ecommerce sales grew by a record 25.7% in 2020, which required retailers to rapidly scale their fulfillment operations alongside store pickup strategies. With extra warehouse space hard to come by at short notice, many turned to their existing storefronts to ramp up fulfillment – and it looks like this strategy is here to stay.
Macy’s experimented with so-called ‘dark stores’ during the 2020 holiday season, while Best Buy has remodeled 250 of its stores into ‘hubs’ designed to handle higher online order volumes and reduce supply chain disruption. Target has pivoted to a ‘sortation’ model which enabled its stores to fulfill 75% of online orders in Q1 2021.
Given the huge investment that store-based fulfillment requires, let’s explore what retailers stand to gain by implementing a ship from store model:
Ship from store strategies typically handle home deliveries within a specific radius of a local store, meaning you only need to focus on the last mile of delivery. This is typically the most expensive and least efficient stage of the fulfillment process. It requires retailers to shift from batch processing to individual deliveries, which entails much higher shipping costs.
With a ship from store strategy, it’s not necessary for completed orders to pile up until a delivery route becomes cost-effective. Regional and third-party carriers can facilitate short-haul deliveries at a low cost with quicker delivery times. Where guaranteeing next-day or same-day delivery is usually not possible with a centralized fulfillment strategy, ship from store enables these capabilities to enhance the customer experience.
Excess store inventory is a common problem in brick and mortar stores. Most demand forecasting isn’t sophisticated enough to pinpoint demand for specific store locations, even though regional tastes and preferences can vary significantly. The result is that specific SKUs can sell out in one location – while piling up in another.
To prevent dead stock and free up space for new SKUs, many retailers end up resorting to markdowns to shift units, resulting in lower profits. This can be avoided with the ship from store fulfillment method, as you can repurpose idle stock for customers to buy online or transfer it to better-performing store locations. This enables you to create a localized inventory strategy tailored to the demands of individual stores. Moreover, leaner and more mobile inventory frees up more space to dedicate to displays and showrooming.
The explosion of online sales due to the pandemic has seen many retailers try to obtain extra fulfillment and warehousing space to manage the increase in online orders. However, this is much easier said than done – even for the likes of Amazon.
According to Business Insider, a brick-and-mortar store needs around 350,000 – 400,000 square feet of warehouse/distribution space, while an online seller needs about 1.2 million – and this isn’t easy to come by. As ecommerce continues to grow, 1 billion square feet of extra warehouse space will be needed by 2025.
When additional commercial space isn’t readily available, retailers need to get creative if they’re going to meet consumer demand. As an existing investment and labor resource, physical stores present a solid alternative without the need for an extensive onboarding process.
Despite the clear upsides, ship from store carries its fair share of challenges. If retailers don’t work to mitigate these you may end up achieving faster delivery at the expense of your in-store operation, which isn’t going to help your brand in the long term.
If you’re serious about implementing a ship from store model, you need to consider the additional complexities it will add to your fulfillment operation.
This might seem like a minor detail, but it’s an incredibly important one. Fulfillment centers are designed to maximize efficiency as much as possible. Everything from pick locations to warehouse shelving systems is designed to knock precious minutes or even seconds off the turnaround from order processing to shipping products. Combined with advanced technological solutions such as automation and data analytics, and this can be streamlined even further.
By contrast, physical retail locations are designed to be customer-facing. The vast majority of floor space is dedicated to product displays that are aesthetically pleasing, rather than designed for rapid picking and short travel distances. So-called ‘back room’ space is normally kept to a minimum, which is a big problem for your ship from store efforts.
Even with costly renovations to improve fulfillment processes, store-based fulfillment will struggle to match the efficiency of true fulfillment facilities. If retailers come to rely on ship from store too much, this could result in a general slowdown of their fulfillment network.
Some of your store locations will likely be better suited to a ship from store program than others. Stores with a smaller footprint and fewer associates, for example, are more likely to struggle with the demand of fulfilling online orders – especially if they’re also trying to manage BOPIS. Instead of rolling out ship from store in every location, consider trialing it at a storefront that has the appropriate backroom space for fulfilling orders. This allows you to identify any teething problems and rectify them before rolling it out more widely.
As many retailers have found out the hard way, store-based fulfillment doesn’t always align with the principles of an enjoyable in-store experience. Put simply, turning your store into a warehouse isn’t going to impress customers.
Retailers who pivoted to store-based fulfillment during the pandemic faced their biggest difficulties when reopening their doors to customers. With associates accustomed to having the full run of a store to fulfill online orders, this led to a lot of friction for in-store shoppers. If store staff are picking orders from the same aisles browsed by customers – in effect competing with them to fulfill orders – this undermines the value of the in-store experience.
Walmart and Macy’s have faced heavy criticism by retail commentators for their apparent prioritization of online orders over in-store shoppers. Issues such as empty shelves and ‘tossed’ store displays have escalated as some stores become appendages to ecommerce fulfillment, rather than selling channels in their own right.
While there’s going to be an overlap between your online and offline operations, you need to keep this to a minimum to prevent the in-store experience from being negatively impacted. For example, having associates pick shop from store orders outside of regular trading hours is a good idea if you’re unable to set up a dedicated pick area for online orders out the back. This helps to avoid awkward situations where pickers are having to beat customers to secure popular items.
If ecommerce fulfillment responsibilities are added to your store associates’ plates, this becomes a difficult balancing act to maintain. If staff are expected to serve in-store customers while also running around and picking orders, their attention is going to be spread very thin. If in-store customers can’t find a single associate who is available to help them because of a surge in online order volumes, they’re not going to hang around. In effect, you’re giving the message that online shoppers are valued more highly by your business than in-store shoppers.
Moreover, if store staff were originally hired for customer-facing roles, pivoting to logistics could be a major challenge. This requires a different set of skills to customer service and not all personnel will be suited to these responsibilities. If staff aren’t given the option to remain front of house, they might choose to work elsewhere – not ideal during a time of record labor shortages.
For your ship from store strategy to be sustainable, it needs to be clear to your staff what their priorities are. Splitting them into dedicated teams for ecommerce fulfillment and customer service will enable you to run a much more streamlined operation without interruptions to either online or offline selling. It may be necessary to hire additional casual staff for fulfillment to handle periods of higher demand such as the holiday season.
Real-time inventory visibility is essential to ensure that customers aren’t placing orders for goods that are currently out of stock. However, ensuring accurate inventory counts within a traditional storefront is much more difficult than a warehouse.
Unlike a purpose-built fulfillment center where inventory storage is carefully managed, physical retail stock is being handled by customers on a daily basis. Items being picked up and not returned to their original places, garments left in fitting rooms, or even being shoplifted makes it extremely difficult for stores to keep track of their inventory. If they’re unable to find an item that a customer has paid for online, this slows down the fulfillment process and may require that order to be canceled.
To avoid missing stock or embarrassing stockouts, it’s a good idea to designate a certain percentage of popular SKUs for fulfilling online orders and keep them off the shop floor. During peak times like the holiday season, this ensures that your staff know exactly where to find items and don’t waste valuable time searching the shop floor. It’s important to keep a close eye on in-store demand to ensure that you aren’t accidentally cannibalizing your in-store sales.
Aside from the physical remodeling of your storefronts, the following capabilities are vital for a successful ship from store fulfillment strategy:
Unified inventory management. It’s impossible to implement ship from store if your inventory is siloed to different channels. To allocate orders and inventory to the correct location, there needs to be full visibility across storefronts and warehouses. This enables your staff to view inventory levels in real-time and identify who is experiencing the highest demand for different SKUs.
Rule-based fulfillment. Being able to set custom order rules for fulfillment enables you to ensure that orders are being fulfilled by the appropriate place. For example, if a customer has placed an order with expedited shipping, it’s prudent to allocate it to a proper fulfillment facility. This is because they’re better able to meet tight deadlines than a regular store. With the right OMS (order management system) you can set an order rule that automatically routes orders involving express shipping to a fulfillment center, meaning you don’t have to screen every order manually.
Direct integration between your ecommerce platform and OMS. You should seek out an OMS system that can facilitate a two-way integration with your online store. This means that changes to your inventory levels will sync automatically whenever a customer places an order or makes a return. By ensuring inventory accuracy, you can be confident that all orders placed are able to be fulfilled.
Equipped with decades of expertise and an advanced fulfillment platform, Whiplash is the perfect partner for retailers wanting to implement ship from store fulfillment. Our proprietary technology enables businesses to view their inventory across locations in real-time and achieve the ultimate level of control over their online orders. Filter, view, and pause orders on the fly as required, and even set flexible order rules to control routing and packing. We also offer direct integrations with all major ecommerce platforms including Shopify, ensuring that your ship from store strategy enhances customer satisfaction and loyalty.