Reports of the death of stores have been greatly exaggerated. In fact, savvy merchants recognize that their networks of physical locations – far from being costly liabilities – have the potential to give them an edge when it comes to fast, efficient order fulfillment. But to take advantage of that opportunity, sellers need to implement not only modern order management software, but the best practices that fulfill customer expectations.
Merchants need look no further than the biggest names in retail to see the power of in-store omnichannel fulfillment. After purchasing Whole Foods for $14 billion last year, Amazon has now installed lockers in some 16% of the grocer’s 473 locations for pickup of online orders. Walmart, meantime, offers 700 pickup towers of its own, which act like large vending machines dispensing products purchased online prior to the store visit. And department store Kohl’s enjoyed 6.3% year over year holiday revenue growth in 2017, thanks in part to operational efficiencies that saw more than a third of online orders fulfilled through its store locations.
Such gargantuan efforts to integrate order management systems, eCommerce software, and store point-of-sale terminals help meet rising customer expectations for integrated omnichannel experiences. In-store fulfillment capabilities:
- Enable popular in-store pickup options — fast. Some two-thirds of participants in Kibo’s 2018 Consumer Trends survey said they used Buy Online, Pick Up In Store (BOPIS), and 30% said that when they did, they expected to be able to retrieve items ordered online within 24 hours. Store-to-store networks help merchants fulfill pickup orders more quickly than shipping to stores from a remote distribution center.
- Enable faster home delivery. Kohl’s reported that home delivery timeframes were 25% faster when using store fulfillment — satisfying shoppers’ growing need for speed even for economy or free shipping. And thanks to proximity, costs can be lower than shipping across state lines from the distribution center.
- Make out-of-stock a rarity. Access to the brand’s entire inventory is crucial to both online and offline consumers: Some 57% of shoppers in Kibo’s study report relying on store associates to source out-of-stock items at other locations, while online, access to store inventory can prevent cart abandonment on the part of some 24% of shoppers who report leaving sites when they discover items aren’t available for immediate fulfillment, according to technology researcher Forrester.
Retailers additionally benefit when they leverage their networks of store locations, because:
- They achieve optimal inventory efficiency. Processing online orders with existing in-store inventory can help manage stock organically, instead of relying on tactics such as deep end-of-season discounts. And retailers who draw on local inventory to fulfill both online and offline purchases can better understand regional demand.
- They earn incremental revenue. Customers who pick up items shipped from another location are likely to add more to their orders. Forrester found 34% of customers who used in-store pickup made additional purchases in the store.
To realize these omnichannel benefits, however, merchants must make significant investments in order management and eCommerce software – and follow through with extensive reorganization to support new offerings. Among the line items to include when scoping the project:
Store layout overhaul and stockroom expansion.
Retail stores and fulfillment warehouses are very different facilities for good reasons, largely related to maximizing revenue per square foot. Traditional physical stores are designed to maximize showroom floorspace, leaving the stockrooms in often-cramped quarters not designed for employees to efficiently pick orders.
In many cases, merchants have opted instead to send associates into the aisles to pick orders for shipment, which comes with its own inherent inefficiencies — such as shoppers interrupting pickers with time-consuming requests for assistance. Retailers who can dedicate more room to stockroom inventory and streamline showroom space can keep employee functions separate.
Development and testing of new procedures.
Merchants should engage store management to develop new routines for modern omnichannel operations. For example, merchants should have a plan for how to handle orders that contain items sourced from multiple store outlets – an increasingly-common situation that requires logistical prowess. Such new practices should be tested extensively before introducing them to store staff and customers.
Staff diversification, expansion, and training.
With omnichannel fulfillment comes new roles for store employees, such as servicing online order pickup and picking and packing orders for delivery. Retailers should include the cost of hiring additional associates for such tasks when budgeting for omnichannel fulfillment expansion.
And, of course, ongoing employee training is crucial if new offerings are to succeed. Training in omnichannel processes is key, as are incentive programs that reward associates not only for closing sales in the aisles, but taking advantage of store capabilities as service and fulfillment hubs.
Despite the logistical and technological complexity of mastering store-to-store fulfillment, the potential rewards are significant. One Kibo customer integrated order management functionality, eCommerce software, and in-store operations in order to offer swift in-store pickup for online orders – and reported 110 percent year-over-year online revenue growth as a result.
What’s holding you back from implementing new in-store delivery services?