Second day delivery service for ecommerce orders anywhere in the U.S. is only possible for players with massive warehouses, robots, and drones, right? Wrong. While it may seem difficult to compete with established monolith ecommerce pure plays that have speckled the landscape with distribution centers staffed with hordes of employees, the same level of service can be offered by retailers with significantly fewer resources.
Retail chains can leverage the power of existing stores by equipping them all as fulfillment centers, vastly expanding the footprint of customers they can serve within all-important 2-day delivery zones. If the chain is national, coverage can be as good as any e-commerce pure play out there; if not, it’s at least as good in the regions where it does have stores. Best of all, this can be achieved without incurring large IT, supply chain, or human resource expenditures.
Harnessing the fulfillment power of existing retail infrastructure requires three main things:
Best store fulfillment routing automation
Before a web order can be fulfilled, it must be decided which store is the most ideal shipping center. Called best store fulfillment logic, this algorithm is integrated into retail management software and routes each order to the appropriate fulfillment center, or store. This automated process prioritizes elements like availability, so if the SKU is sold out at the closest location, it will automatically route it to the next best option. The more stores available to choose from, the more fulfillment can be optimized.
While optimizing shipping times are the most obvious and commonly used directives for best store fulfillment logic, priorities can be altered. For example, if one store has a large supply of merchandise that is about to go out of style, new orders for that item can be routed to it for fulfillment so its inventory depletes faster. Shipping time optimization is the most popular function of this best store fulfillment, but automated order routing can be modified to serve any operational goal. Of course, this can all be done manually as well — but the time and labor hours required to do so make it a losing proposition.
Integrated inventory management
If a customer purchases the last instance of an SKU in inventory, but the POS platform doesn’t sync to ecommerce until overnight, there is a window of time where an ecommerce customer could purchase the same item thinking it will ship quickly. In reality, it might have to ship from further away or even worse — it might be out of stock across all stores. That’s one reason why it is necessary for all channels to be integrated with inventory changes reflected in real-time.
This also allows for reporting that enables retailers to make smarter inventory placement decisions. Granular data indicating the source location of every order for every SKU provides intelligence that can be used to determine optimized inventory distribution for similar merchandise or restocks of the same SKU. It also greatly reduces confusion when reconciling receipts with inventory levels, making it clear where issues like shrinkage are present.
Human capital knowledge and buy-in
The logistics of turning every physical store into a shipping center are fairly straightforward when POS and ecommerce platforms are integrated: Packing materials, a label printer, and a person to package and send web orders are generally all that is required. But getting over the human capital roadblock can be tough. Some employees are afraid to send these orders; others simply don’t think they should have to as part of their jobs.
Shipping processes are easy enough to expect any average employee to be adequately trained quickly, but the psychology of performing the task can take longer. Simple training processes, involving employees directly in the change, and incentivizing success are tactics that help ease the transition. Shipping from stores actually protects employees’ jobs, and once team members are on board, it just becomes part of a normal day.
The biggest mistake any retailer can make is failure to optimize processes that create efficiencies across sales channels, especially the ones experiencing the most growth like ecommerce and mcommerce. Barriers to effective competition in these spaces are not nearly so insurmountable as they can appear when retailers leverage existing resources. In fact, some footprints put traditional brick-and-mortar retailers in much better positions to serve customers than their ecommerce pure play competitors.
Ian Goldman, President and CEO of Celerant Technology