Customer Experience

Sending orders from stores is not so ship shape

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

It is widely believed to be obvious that e-commerce fulfilment from the bricks-and-mortar store is a good thing. But is the model as efficient as we think?

One of the keys to providing a proper omnichannel shopping experience is the capability to fulfil online orders from the store.

The logic seems impeccable – since many retailers have a store fleet or at least multiple retail outlets, productivity from these real estate assets can be raised by using them not just to supply walk-in customers, but to also send e-commerce orders.

Delivery man painted on road

So many reasons to ship-from-store

Ship-from-store has several other advantages as well. First, if an item is unavailable in the warehouse but available in a store, posting from the store lessens the potential for an online order to be out-of-stock. Put simply, you increase your total sales.

Second, there can be a profitability benefit. If an item is selling slowly in the store, shipping it to fulfil an e-commerce order forestalls having to sell it at a lower clearance price later on. In other words, store inventory that is made available to both store customers and online customers’ raises profit margins.

Third, if a store is closer to the customer than the warehouse, then ship-from-store reduces the time between the customer making the online order and receiving the package. It can also reduce shipping costs. Faster delivery at a lower cost gives the customer a positive surprise while reducing the retailer’s cost of doing business.

In many instances the positive ship-from-store thesis has been borne out in practice, with retailers already doubling up their stores as fulfilment warehouses and claiming big successes. And in the case of independent retailers with just a store and no distribution warehouse, shipping from the store is a fait accompli.

Time to reconsider – ship-from-store may not be for everyone

Despite all of the compelling arguments, ship-from-store is not without its detractors, and the topic is now the subject of a big debate in the industry. The doubting Thomases have some good ammunition. The central problem is that in the very act of improving service to e-commerce customers, the retailer could be endangering service levels in the store. Specifically:

  • Using sales assistants in stores to pick and pack online orders may be inefficient because it is not what they were primarily trained or hired for.
  • It's usually harder to find things in a store than in an automated distribution facility. (If that is not the case, there is something wrong with the distribution facility.)
  • Sales assistants who are fulfilling online orders are not attending to customers in the store, risking service levels and the overall shopping experience.
  • Using store inventory to fulfil online orders can potentially fragment store assortments too early in an important selling season, such as Christmas. Customers coming into the store in early December are going to be upset if they cannot get their hands on the right colour or size.

Ship from store

So given these potential drawbacks, should the retailer ship from store or not? And if so, how does he minimise the ship-from-store’s negative aspects? On the should-you-or-shouldn’t-you question, the answer will depend on an evaluation of three things in particular:

  1. The degree to which the retailer’s business model is based on a rich in-store customer experience with high service levels.
  2. The degree of disruption that will occur to in-store operations if employees are fulfilling online orders. For example, if there is a relatively large amount of backroom space it may be much easier to set up e-commerce distribution from the store.
  3. The degree to which pick-and-pack operations can be scheduled around peak in-store shopping times. Can fulfilment of online orders be carried out before or after the store opens?

If the retailer has a high in-store service model and limited space, then ship-from-store may not make sense unless, of course, it’s a mum-and-pop operation where the store and distribution centre are identical. In that case, the retailer needs to take steps with respect to staff training and fulfilment procedures to ensure that the e-commerce business creates minimal disruption to store operations.

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