Article

Is it Time to Operationalize Ship From Store?

By Manhattan Staff,
Is it Time to Operationalize Ship From Store?

Just a few years ago, progressive merchants started sending e-commerce and catalog orders through stores, and filling those orders with merchandise from store shelves and the backroom. Many did it to make use of excess inventory. Some did it to speed up fulfillment. Still others did it to satisfy the fast growth of online sales without buying more inventory.

Regardless of these initial reasons, ship from store has become an omnichannel mainstay. Several factors are driving the trend, including:

  • Difficulty predicting demand. In a recent report from RSR1, 60% of leading merchants agreed that “the way consumers use different channels to make purchase decisions is unpredictable, but important to understand.”  This makes it unlikely that every store's inventory levels will ever be finely tuned enough to avoid unplanned overstocks and markdowns—and makes it more likely that ship from store will remain an 'equalizer' between regional supply and demand.
     
  • Shrinking store footprints. Multi-brand retailers in particular face pressure to shrink store footprints2 and reduce inventory to minimize markdowns and fine-tune store-specific merchandise to meet local demand, but results in fragmentation of the entire assortment. Localized assortments can be a competitive differentiator, but they increase the likelihood that a customer may want an item that's not available in a local store, which results in a save-the-sale order being fulfilled by another store.
     
  • Free shipping. Because free shipping3 is today’s go-to online promotion, shipping from the closest store or the store with the most available labor can mitigate the impact on retailers' margins.

Juggling ship from store with customer service and selling responsibilities has become a fact of retail life for store associates. The good news is, it’s possible to make ship from store a sustainable, more profitable part of retail's new normal.

Our analysis of pilot-level trial and error has revealed four methods for operationalizing scalable, labor-efficient and associate-friendly ship-from-store processes.

1. Mobile-enabled batch picking and packing

Paper-based ship-from-store processes create a burden on associates by pulling them away from customers for large chunks of time. Meanwhile, simplistic mobile apps that process one order at a time create inefficiencies in picking and packing flows. However, if store associates are equipped with a mobile app that intelligently batches similar tasks across multiple orders (say, for instance, all ordered items on hanger) and allows associates to quickly pause and resume tasks, they are able to fulfill orders quickly during periods of downtime.

2. Task-driven, spatially-sequenced fulfillment via multipurpose devices

Ship-from-store tasks should be logically and dynamically sequenced based on store layout and inventory locations. In effect, the associates’ devices should serve as their virtual GPS within the store, directing them on the most efficient path to pick ship-from-store orders. This is especially important in large-format department and big-box stores, where multiple customer orders lead associates to several different departments in the far reaches of the store.

3. Adaptable enterprise business rules governing order flow and inventory availability

On the back end, efficient ship-from-store operations require an enterprise order management system that allows a 360-degree view of inventory, control of all in-flight customer orders and a nuanced understanding of fulfillment business rules. An order management system with these capabilities helps merchants determine:

  • Whether orders should be sent to larger stores or to smaller, lower-traffic locations
  • Times of day/days of the week that offer the greatest availability of store labor
  • Which stores and staff have the space, equipment and skill set to handle certain requirements, like value-added services (e.g., gift wrapping) and special packaging
  • Where not to send ship-from-store orders because they might interfere with store-level promotions or high sell-through of an ordered item
  • Which stores are most likely to fall into a markdown cadence due to overstock of a particular item

4. Improved inventory accuracy and inventory governance. Visibility is not the same as availability. Merchants need assurances that the store inventory designated to fulfill online orders is, in fact, available to sell. That’s important for avoiding order delays and cancellations, and essential for ongoing inventory allocation improvement. If the store knows when merchandise will arrive and can sell against that inventory, for instance, it’s far more efficient and less disruptive to take that merchandise off of the truck and prepare it for shipment than it is to pick, pack and ship merchandise that’s already on the sales floor.

People, Processes and Mobile Technology Are Better Together

Ship-from-store operations that seamlessly connect associates, processes and mobile devices promise to be the new normal in omnichannel retailing. With some collaboration and standardized operational process improvement, shipping from store can be done efficiently and drive bigger bottom-line benefits.

Retailers' Omnichannel Blind Spot: Digital (rsrresearch.com)
Retailers shrink their footprints for a digital age (smartbrief.com)
The Future of Retail is Fast, Free Delivery (Forbes.com)

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