“Consumer centricity is increasingly necessary for retailers and brands to maintain loyalty within highly saturated markets. Launching technology that not only delivers shipments in an expedited and efficient manner while subsequently optimizing current inventory levels will improve margins.” - WWD
I’m definitely one of those shoppers this year.
As I narrow down the search for my dad’s gift, shipping cost and delivery speed are by far one of the top deciding factors.
While, admittedly, waiting the week before Father’s Day could have something to do with this (guilty), the data behind online delivery expectations say otherwise:
- 72% of consumers factor in two-day delivery to help decide whether or not to make an online purchase.
This “Amazon Effect” (so it’s been dubbed) is bringing the heat to retailers big and small, and urging many to discover ways to focus their current supply chain around the customer.
Especially when it comes to the “last mile” as many traditional brick-and-mortar retailers realize one of the best ways to implement a “customer centric” approach is to capitalize on proximity – i.e., their physical stores.
The State of Order Fulfillment
With an “endless aisle” of products available at our fingertips, people shopping online set the same delivery expectations regardless of order complexity – which is significantly increasing the more retailers look to compete and offer the right assortment their customers want.
How can retailers meet increasing delivery expectations as order complexity also increases?
As we mentioned earlier, traditional retailers are making up for these demands through their physical store network.
For many, overcoming this “last mile” means implementing a ship-from-store strategy to bring them that much closer to the customer and improve service expectations:
“Though in-store traffic has declined, sales conversions in stores remain steady and shops will play an increasingly important role in e-commerce growth. Of the 635 stores, 400 now are able to ship from store, meaning online orders can be fulfilled and distributed from stores rather than a distribution center.” – David Kornberg, CEO of Express
While leveraging brick-and-mortar stores to fulfill online orders has proven successful for many, it can also be very easy to execute ship-from-store ineffectively.
Why is it so hard to get ship-from-store right?
Your storefronts bring you closer to your customers. By leveraging proximity, retailers have the opportunity to reduce time to customer and shipping costs.
However, leveraging storefronts also introduces it's own set of complexities:
- How do you get your inventory right
- Assessing the capabilities of each location to react to online demand
- And perhaps the most important, is assessing how each location can accurately predict future demand for each product they carry
If anyone reading this has any experience with ship-from-store, you understand how the failure to overcome these challenges can have a detrimental impact on profits and the overall effectiveness of your program. Customers expect everything in stock, all the time — regardless of channel.
So when retailers decide which store to fulfill from, they have to consider a number of factors such as future demand, multiple business constraints (like split shipments, weeks of supply, pick-declines, shipping rates) and the potential benefits of leveraging each store.
Fulfilling an order isn’t always as simple as shipping product from the store closest to the customer.
The most important factor retailers must account for is the demand for a product at the store level—otherwise you’re just hurting yourself by pulling product from a location that’s likely to sell-through at full price.
Clearly, the ship-from-store struggle is real.
With so many moving parts, so many factors to consider, figuring out what the ideal ship-from-store scenario is for any given order is really hard without the right technology in place.
As e-commerce sales rise, it’s only going to get harder.
How can retailers leverage their stores effectively to overcome the challenges preventing ship-from-store success?
Optimize SFS with Advanced Analytics for Omnichannel Success
The ability to predict customer demand to determine which stores have more inventory than demand requires is critical to an organization properly leveraging their inventory investment wisely.
Advanced analytics has the ability to provide these insights to retailers.
By understanding what your customer wants, and how they interact with a given assortment of products can actually empower retailers to make more efficient, accurate ship-from-store decisions. Multinational footwear retailer, Aldo, is overcoming this very challenge with Celect’s patented, machine learning technology:
“[T]he ALDO Group is successfully fulfilling its online orders from the most profitable location, all with the help of Celect Fulfillment Optimization. Celect accurately predicts customer demand in real-time and subsequently determines which stores have more inventory than demand requires. This provides the ALDO Group with the ability to intelligently avoid selling from locations that are more likely to sell out, while targeting stores more likely to experience a lower demand for a particular item.” – PR Newswire
Retailers who have a clear understanding of location-specific demand to drive fulfillment strategies will reap the most rewards – while exceeding customer delivery expectations.