Editor’s Note: This post was originally published in May 2017 and has been updated for freshness, accuracy and comprehensiveness.
Ship-from-store is an important part of the omnichannel retail strategy. For anyone not familiar with the concept, ship-from-store is exactly what it says. Rather than fulfilling orders from a distribution center (DC), the store acts as the inventory source. Products are picked and shipped from the store’s inventory, rather than shipped exclusively from DC. Not only does this reduce store inventory, it improves margins and overall business performance. There are seven main ways that ship-from-store helps retailers:
1. Speeds Store Inventory Turnover Velocity
For any manager responsible for a store or group of stores, ship-from-store is an important step forward. As mentioned above, rather than having orders fulfilled through the DC, the store acts like the inventory source. It means store inventory experiences a higher turnover velocity. When you fulfill more merchandise from the store, not only does store inventory turn faster, it also helps retailers put more inventory closer to the customer. That is good for business, as it results in lower stockout positions.
2. Improves In-Store Resource Efficiency
When store traffic is low and store associates have extra free time, a retailer can improve their effectiveness by having otherwise idle associates work on order fulfillment with in-store merchandise. This is where having an effective order management system is key. Good retail order management systems will provide an order to a particular store for fulfillment. If staff and resources are available, they can fulfill the order, or let it flow to the next nearest location. While one store may be busy, it might not be as busy at another nearby location. Hence, a good retail order management system helps balance out resource use throughout the chain.
3. Distributes Workforce During Peak Season
During the end of year shopping season, retailers usually staff up their DCs with thousands of seasonal workers. Is this the best and most cost-effective way to hire seasonal staff? Rather than taking such a highly concentrated hiring practice, by using ship-from-store retailers can better distribute their hiring efforts. In the end, this should help retailers maintain lower and more controlled costs throughout the season and retail year.
4. Reduces Risk When ‘Acts of Nature’ Occur
Reducing a retailer’s reliance on a single major inventory source, like a centralized DC, means lower risk related to acts of nature. During year-end shopping season in North America, a DC located on the East Coast can easily get snowed in. Surprisingly with the effects of climate change, this is happening even in regions with historically moderate weather. Using a ship-from-store means having a distributed order fulfillment strategy. There is no single point of failure and no halt in order fulfillment because of inclement weather, which has a way of happening during peak selling season.
5. Improves Speed of Delivery
If all your online orders are fulfilled from the DC, your deliveries could be taking longer than needed. Once an order is placed online, you want to get it to the customer as fast as possible. It will reduce the likelihood of a cancelled order and improves the customer’s satisfaction with your brand’s services. Delivering from the closest store location to your shopper can speed up delivery. It just makes sense that shipping a parcel within five miles/km will be faster than shipping it from several thousand miles/km away. Plus, if the store is close to your customer, they may just opt for picking up the merchandise themselves. Making it faster, yet.
6. Supports Click and Collect
Preparing your store locations to handle ship-from-store capabilities, also means preparing the store to be able to handle click and collect or in-store pickups. It will be the same resources and processes, except that you will hold the package for the customer and save on shipping fees.
7. Lowers Overall Cost of Shipping
Not only can ship-from-store make the order fulfillment process faster for your customers, it will save on shipping costs in two ways. First, shipping a package five miles/km will cost a lot less than shipping it from a centralized DC which could be significantly further, like 1,000-2,000 miles/km away. Second, as suggested in point six, the customer may simply choose to pick up the item for themselves. That provides shoppers with instant gratification and a ZERO cost alternative to shipping the merchandise.
How to Get Ship-From-Store Started?
To get your ship-from-store efforts moving, you need to start with a robust retail order management system. There is no need to buy an entirely new ERP system to achieve a unified commerce solution to drive this effort. Instead, focus on a deeply functional SaaS-based solution that is specialized in retail order management. An end-to-end retail fulfillment solution with open APIs can be easily integrated into your existing retail technology, bringing it up to date for the next phase of retail and avoiding the need to rip and replace your existing systems and procedures.
