Ship-from-store is increasingly becoming an important fulfillment option as customers expect convenience and immediacy
While leveraging store inventory often results in a less expensive, best service fulfillment solution, an optimal store fulfillment strategy that takes into account store labor, inventory positioning, technology and customer expectations is key to balancing both cost and service.
Are you feeling the pressure to deliver and optimally enable ship-from-store on the operations side? On the IT side? It’s easier said than done, and impacts supply chain, store operations, customer service and cost across the entire retailer network. [How does shipping affect my department?]
Before we get into best practices for implementing a ship-from-store strategy, let’s go over the benefits. First and most important, ship-from-store strategies make shipping faster and less expensive. When inventory is sourced closer to the customer, delivery timeframes shrink and with single-zone delivery transportation, costs are reduced.
Second, there are fewer markdowns, meaning, it can be more profitable to ship full-price merchandise from the store rather than to significantly mark down items to move inventory from within the store. The profit margin from a higher priced item shipped from the store will often offset associated shipping costs, which eat into profit margins, compared to cash and carry. Stat: According to a recent report by consulting firm Kurt Salmon, retail revenue increases of 10 to 20 percent have been seen when merchandise that’s out of stock in distribution centers is sent to customers from stores.
Lastly, it allows you to remain competitive with e-commerce giants. Two-day and same-day transit times have become a customer experience expectation. Ship-from-store can help omni-channel retailers effectively compete against Amazon, eBay and other online marketplaces, and most importantly, help meet their customers’ expectations, leading to stronger-than-ever customer revenue streams.
Got it down? Here are our 10 Ship-From-Store best practices for implementation and success:
1. Begin strategizing now, not later. Online sales will continue to eat into in-store purchasing, placing pressure on brick-and-mortar stores to remain profitable. With significant investments in brick-and-mortar, ship-from-store is an opportunity to keep physical stores relevant and optimally leveraged. There is no other choice than to start thinking about how you can use your stores to fulfill orders as soon as possible.
Tip: The goal for retailers today is to deliver one single standout brand experience, regardless of where or how the customer buys. Mapping out the ideal customer journey is an important step for any customer-centric organization. This exercise will point to critical gaps in your unified commerce strategy.
2. Find a champion. Do some research and find out who’s doing ship-from-store and how they’re doing it. Keep in mind that your retail operation is unique from others, so while it may seem easy to replicate a fellow-retailer’s strategy, it’s not always a model that will work for you as well. Each company and each company’s customer base is different. Find a distinguishing angle of your own, because people love niche. Focus on doing what you’re able to do, and do it well. [How Petco Ships from Store]
3. Convince C-Suite. Now, make the connection to what C-Level cares about: As you move up the chain of command, remember that C-Level executives have a lot of important decisions they have to make daily, and they’re swamped with ideas from department heads constantly. It’s important to be sure that you explain the qualms that exist in the shipping department in terms of how greatly they affect the company’s brand, reputation, customer loyalty and ultimately, the bottom line (as these are the top four concerns C-Level executives have). [Read more about C-Suite]
4. Make sure your stores have the space. In order to initiate a ship-from-store strategy, retailers need to evaluate how much space will be needed to turn existing aisles or backrooms into storage for online orders. Also, don’t discount what will need to happen on the labor side, like training. An effective ship-from-store strategy will demand a review of store labor requirements to ensure enough associates are available to both effectively service customers in the store and manage in-store operations (non-customer facing store tasks the include ship-from-store fulfillment).
5. Find your best store locations to implement the strategy first. Connecting consumer demand with inventory in the most flexible and cost-effective way is what ship-from-store is all about. Consider selecting locations closest to your best customers that will enable fast delivery, and if possible, allow customers to get their packages in 1-2 days. Remember, the most successful ship-from-store strategies have the capability to scale. A strategy that focuses on a single “locality” will be difficult to scale in other areas. Being able to identify a widespread but local need and having a model that adapts to each new market will be crucial.
6. Research carriers. A common myth: a single carrier can supply all of a shipper’s same-day and ship-from-store needs. Some facts: coverage varies by carrier, no carrier covers coast-to-coast, there’s volatility amongst carrier offerings. Think about using a variety of carriers, and don’t discount the smaller ones (like Deliv). Together, local, regional and national carriers create a perfect mix of delivery options and capabilities. In fact, smaller local carriers account for almost 60% of the U.S. trucking industry and can typically transport shipments from 80-100 miles within a specified zone. They are great for parcel last mile delivery as they are able to provide personalized, caring service for clients. Regional carriers are great for shippers with multiple distribution centers and a high concentration of customers within a geographical market. They also typically have wider time schedules for pick-up and delivery and often provide next-day deliveries. [Learn more about same-day delivery carriers]
7. Remember returns. Return policies are very important to customers. Most consumers expect free and easy returns, and if they do not like your return policy, they may choose to shop elsewhere. A ship-from-store model can complicate the process. Make sure you determine whether items fulfilled in-store should be returned to stores or distribution centers and set clear policies for customers in terms of accepting returns in person at stores and/or via mail.
8. Check software capabilities. Do you have the proper enterprise technology stack to enable ship-from-store capabilities? Minimally, you will need an E-Commerce System, OMS and POS, but also a way to create shipping labels at store locations such as a Multi-Carrier Shipping Software. Your ERP, WMS, and EDI systems may also play a role. [Webinar: The Digital Transformation of Shipping: The Enterprise Technology Stack’s Effect]
9. After checking capability, check integration. A ship-from-store model is built on the foundation of complete inventory visibility and shipping system capabilities. You’ll need a dependable inventory management system (OMS) that integrates with a shipping software solution to not only track inventory, but to get your orders from the store, onto the truck and into your customers’ hands in the most quick and cost effective way possible. This step cannot be discounted and is worth immediate reevaluation of your current internal systems. [GNC Takes First Steps towards Ship-From-Store]
10. Test, test, test. Don’t just implement something on a large-scale without testing the waters. Yes, ship-from-store initiatives resulted in higher sales, faster delivery times, easier inventory forecasting, improved margins and lower costs, but ship-from store is most fruitful for retailers that have tested it first. Success doesn’t come overnight.
Tip: Create key metrics! Implementing the right key metrics will aptly determine if a ship-from-store program is successful or not and ensure stores are set up to successfully deliver. Metrics drive performance; if poor metrics are in place, they will not drive the right performance and behavior. Conversely, the right metrics will drive the right behavior and promote a successful program.
Ship-from-store is increasingly becoming an important fulfillment option as customers expect convenience and immediacy. Retailers that leverage an optimal ship-from-store strategy are in a better position to meet customer expectations, and drive satisfaction, brand loyalty, competitive advantage and sales.
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This expert-article was brought to you in part by enVista, a leading global software solutions and consulting services firm enabling enterprise commerce for the world’s leading manufacturers, distributors and omni-channel retailers.