In 2009, fashion specialty retailer Nordstrom became one of the first companies to introduce a ship-from-store option for online fulfillment. Since then, the fulfillment option has been adapted by several major retailers, including Toys “R” Us and Macy’s, and is now considered by many as a way to set yourself apart from your competitors.
According to a New York Times article written a year after Nordstrom instituted the ship-from-store method, results were immediate, and “ … the percentage of customers who bought merchandise after searching for an item on the site doubled on the first day and has stayed there.”
Colin Johnson, a spokesman for Nordstrom, notes in an email that since the ship-from-store option went into effect, “we’re able to say yes to the customer more often. We’ve found over the years that the better job we do of serving the customer, the better our results get.”
Sharon Gardner, president and co-founder of VendorNet, says that for retailers that have brick-and-mortar stores and an ecommerce site, “ship-from-store is a big opportunity to see an increase in revenue.” It allows retailers to use the entire inventory in their traditional stores to serve the masses, no matter where they are or how they shop.
For example, even though customers walking into the brick-and-mortar store might not have been interested a blue sweater, size XXXL, someone online might. Instead of that size XXXL sweater going on clearance, it can be sold online at full price.
Gardner has seen higher inventory sales rates at clients within her own client base that currently use the ship-from-store option. On average, she says, 33% of the items her clients sell through the ship-from-store option are considered “inactive products” at the traditional store. Instead of marking down those items, she says, many of her clients were able to sell some of them at regular price through other channels.
“This is an opportunity to be a big revenue driver and can lead to a lot of unrealized demand,” Gardner says.
But the ship-from-store option isn’t benefiting just the traditional stores. Toys “R” Us spokesperson Meghan Kennedy notes in an email that it has allowed the retailer to expand its ecommerce assortment without the addition of inventory to its distribution centers.
“If we are out-of-stock of a certain item in one of our stores, a store associate can determine the availability of the product at another store and have it shipped to the customer,” Kennedy says.
Ship-from-store has been an evolutionary process for Macy’s. According to Jim Sluzewski, Macy’s senior vice president of corporate communications and external affairs, the retailer began the ship-from-store option in 2010 in three of its stores. That number grew to 23 in 2011; currently, of its 800 stores, 292 are ship-from-store capable.
Macy’s will consider expanding the number of ship-from-store locations after it evaluates its 2012 holiday sales figures.
For Macy’s, Sluzewski says, the ship-from-store option will always be a “test and learn environment” so the company can continually identify what works best and how to improve the store fulfillment process.
While Macy’s is seeing a boost in sales based on the ship-from-store option, it is now focusing on expanding the approach by taking inventory offered only at traditional stores and making those products available at the macys.com website. The purpose, Sluzewski says, is to have the company’s entire range of inventory at the customer’s disposal.
Taking the Plunge
Should retailers prepare to implement ship-from-store? Absolutely, says Sharon Gardner, president and co-founder of VendorNet. The ship-from-store strategy is “critical to a brick-and-mortar retailer’s future growth.”
And, Gardner adds, ship-from-store is important for the customer as well.
“If executed well, it translates into increased sales and profits and higher customer satisfaction,” she says. Not only does it help clear out end-of-life merchandise in stores, it also reduces shipping transit time, “which has become increasingly important to consumers.”
Gardner advises that companies that want to implement the ship-from-store option should first make sure that the size of the traditional store is suitable for handling the new option. Make sure the space gives you ample room for picking, packing and shipping, she says, and that it has the correct technology installed.
A store that is equipped properly, she notes, will help make the transition very simple for the store associates.
Jim Sluzewski, Macy’s senior vice president of corporate communications and external affairs, says there were “incremental costs” associated with putting the ship-from-store option into action, such as additional employee hours, printing costs for shipping labels, and scales needed to move the product out of the store.
Merchants, Gardner says, also need to decide who will be paid and who will be held accountable for which transactions.
“Businesses have to be properly incentivized and motivated to make the changes,” Gardner says. “It’s more of an omni-channel approach. Many retailers created a team to bring together the various parties within the firm to work through this single view of the customer.”