Unfortunately, anticipating demand isn’t as straight-forward as it once was. People shop whenever and wherever, leveraging each and every available retail channel.
This makes it really difficult for retailers nowadays.
Increased access also increases consumer expectations across channels—shoppers expect a seamless experience and alignment among brands, products, and choices both physically and digitally. To keep up, retailers must enable a cohesive cross-channel experience through their offerings, including product assortment, purchase, delivery, and return options.
However, it’s really difficult for retailers to provide this seamless, integrated experience in a profitable way.
Unfortunately, you have no choice.
Mastering cross-channel demand is critical if you want to succeed in the retail industry, despite the challenges it presents.
This is why many retailers today are incorporating a ship-from-store (SFS) strategy to help overcome the difficulties cross-channel demand entails. The key advantage of SFS (if done right) is that it allows retailers to provide the differentiated experience consumers seek via better delivery offerings, in a profitable and cost-effective way.
Here are 3 ways ship from store fulfillment can help retailers master cross-channel demand:
Challenge #1: Faster, Better, Cheaper Free
The consumer expects convenience: this means fast and free delivery.
As e-commerce sales continue to rise, further evidence from a recent report by AlixPartners shows that free shipping can make or break a retailer:
- 96% of survey respondents said the availability of free shipping impacts their purchase decision
- 73% of survey respondents said the availability of free shipping has a great impact on their purchase decision
The impact of free shipping on a consumer’s final purchase decision is evident.
Now, let’s dig a little deeper.
What sort of impact does free shipping have in the earlier stages of a consumer’s path-to-purchase (prior to the final purchase moment)?
Luckily, the report provides insight on how free shipping also affects where a consumer browses:
- 70% of shoppers decide their shipping preference before checkout
- 60% of shoppers browse for products based on their preferred shipping options
I think it’s pretty safe to say the option for free shipping is a big deal.
Retailers can’t afford to neglect these findings, as they “strongly support the conclusion that delivery options, and specifically the availability of free shipping, drive online purchase behavior.”
Retailers who don’t offer these delivery options are missing out on critical purchase opportunities in a space (e-commerce) where demand is steadily increasing.
For this reason, ship-from-store strategies allow retailers another avenue to compete and deliver on consumer expectations.
A good example is how Walmart doubles their 4,500 locations as “mini” distribution centers, giving them a ‘last mile’ advantage over Amazon’s extensive fulfillment network.
This is possible because their stores place them THAT much closer to the consumer. It makes complete sense if you take into account the following stats:
- About 90% of the US population lives 10 miles or less from a Walmart store
- About 40% of the US population lives 20 miles or less from an Amazon distribution center
Insane. (Although, not too surprising. They’re everywhere.)
Proximity is a major advantage for many legacy retailers looking for another way to overcome the challenges growing cross-channel demand presents, which is the whole concept behind a ship-from-store program.
The point is for retailers to leverage their greatest asset (their stores!) to meet the growing online demand—all while saving on shipping costs, using slower turning inventory in-stores to fulfill online orders, and reduce the need for markdowns and overstocks.
Challenge #2: No Tolerance for Mediocrity
I came across an article recently where the author challenges the demise of traditional brick-and-mortar retail (which is absurd, even though it does make for great clickbait). The author’s point resonated deeply, as it echoed many of the challenges retailers we speak to often voice—physical retail isn’t dead, boring retail is.
“It may make for intriguing headlines, but physical retail is clearly not dead. Far from it, in fact. But, to be sure, boring, undifferentiated, irrelevant and unremarkable stores are most definitely dead, dying or moving perilously close to the edge of the precipice. […] [T]he stores that are swimming in a sea of sameness — mediocre service, over-distributed and uninspiring merchandise, one-size-fits-all marketing, look-alike sales promotions and relentlessly dull store environments — are getting crushed.” - Forbes
What does this have to do with ship-from-store fulfillment and cross-channel demand?
Well, a number of things.
E-commerce is a “limitless store” for consumers. This means more competition and very little patience for out-of-stock items or poor delivery options. Retailers must go above and beyond: consumers will no longer tolerate mediocrity.
As I mentioned earlier, this means gaining a deep understanding of your customer, offering a unique assortment of merchandise, and providing a seamless shopping experience between the various channels (online and offline) for demand.
I normally stay away from the term “omnichannel” because it just sounds outdated, however, it remains relevant in the sense that it continues to symbolize the new digital and physical retail experiences we seek to build:
“To say ‘We just need to be better retailers right now’ rings hollow. What exactly does that mean? We can share the meanings of words when we understand the details. What we are lacking today is a clear and precise definition of retailing that embraces new delivery platforms, business models and innovations. Omnichannel, like the term or not, is a way to reframe retail and it means exactly what it connotes: retail from all angles that is perpetually “on” and comes at us from every direction.” – Chris Walton, The Robin Report
The point is this: the consumer is the channel. As a result, delivering product to the consumer becomes much more difficult.
Retailers implement ship-from-store so they’re that much closer to the consumer. A well-executed ship-from-store program will help further differentiate retailers against the vast pool of products and competitors accessible online.
Challenge #3: The Traditional Retail Supply Chain Sucks
The last challenge I wanted to touch on has more to do with some of the backend problems retailers run into trying to meet consumer expectations and deliver an exceptional brand experience.
Simply put, the traditional retail supply chain sucks.
It just can’t handle the demand for speed and convenience—at least not in a profitable way. One reason is many retailers don’t have enough distribution centers, which typically house inventory for online orders. Because they lack a vast distribution network, costs to ship product for growing cross-channel demand often costs more than it’s worth. As a result, retailers lose money to fulfill e-commerce purchases.
Just take a look at Amazon’s distribution network! Their success is rooted in the ability to fulfill online orders fast, efficiently, and profitably.
What retailers realized is although they don’t have an extensive fulfillment network in a traditional sense (via distribution centers), they do have a large network of physical stores.
This is huge. Here’s where ship-from-store comes into the picture.
Much like Walmart leverages their store network to improve costs in the example I mentioned earlier, so can traditional brick-and-mortar retailers.
Executing Ship-From-Store Fulfillment Successfully
While ship-from-store fulfillment provides one angle for retailers to master cross-channel demand, make sure you're doing it right.
This is crucial.
For instance, taking into account the way store inventory for SFS fulfillment is optimized. Because online purchases were seen as a secondary source of demand (surprise, surprise — another problem with the traditional retail supply chain setup), data is often dispersed across silos and legacy systems, making it impossible for retailers to anticipate future product demand across channels accurately.
Retailers can reap benefits from a well-executed ship-from-store strategy, however, the cost of a poorly executed ship-from-store strategy can hurt big time.
Make sure you're leveraging the right technology and analytics to fulfill your e-commerce orders and ensure your ship-from-store strategy is done effectively and profitably.