eStar’s sales director Patrick Gaskin discusses the advantages of integrating in-store fulfillment to your omnichannel strategy.
In these tough economic times retailers are presented with challenges around delivering exceptional customer experience in a highly competitive retail landscape. One major challenge retailers often face is that if delivery times are too long, customers will shop elsewhere. According to research from McKinsey, over 90% of shoppers expect free shipping delivered within a couple of days, and 30% expect same-day delivery. So how do retailers achieve this?
One solution gaining popularity within the omnichannel fulfillment strategy is in-store fulfillment, which involves using physical retail locations to fulfill online orders. Among improved customer experience, there are plenty of other tangible benefits to an in-store fulfillment strategy. In this article, we explore each aspect and discuss how they can help retailers increase sales, streamline their operations, reduce costs, and improve customer satisfaction.
What is in-store fulfillment?
Often known as ship-from-store or store-based fulfilment, in-store fulfillment is an omnichannel retail strategy that involves leveraging retail stores as miniature distribution centres. The concept driving in-store fulfillment is straightforward: capitalising on the strategic placement of stores in prime locations. Unlike conventional warehouses, stores are often situated closer to consumers, resulting in reduced lead times for order fulfilment and enhanced cost-efficiency in shipping.
By implementing multiple stores as fulfillment options, retailers can alleviate some of the pressure on their distribution centres. They can also provide customers with access to more inventory and quicker delivery times while giving them more options for returns and exchanges.
When implemented successfully, in-store fulfillment offers retailers a range of benefits.
1. Increased sales growth
In-store fulfillment can help to increase online sales by providing customers with access to a wider range of products available in nearby stores. Retailers can then expand their online inventory without having to increase their warehousing or storage capacity. By leveraging in-store inventory, retailers can offer a greater variety of products online, resulting in increased customer satisfaction and sales. Retailers have reported up to a 60% increase in online sales after implementing in-store fulfillment, which highlights the significant impact this strategy can have on growing the online side of a business.
By implementing in-store fulfilment, retailers can leverage Click & Collect fulfilment options. Click & Collect, a key element of in-store fulfillment, can make up around makes up approximately 30% to 40% of online sales for retailers, with the best-in-class pushing upwards of 60%.
2: Drive store performance and improve efficiency
In-store fulfillment not only benefits online customers, but it also has a positive impact on the overall performance of physical stores. By using stores as distribution centres, retailers can
boost their sales and reduce their inventory carrying costs. Additionally, in-store staff can take on new roles and responsibilities, such as picking and packing orders, which can further streamline the fulfillment process and improve dispatch speeds.
When implemented with the right technology, in-store fulfillment provides real-time updates on product availability and stock levels. By using stores as distribution centres, retailers can centralise their inventory and gain better visibility into their stock levels across all channels. This allows for more accurate inventory tracking and management, reducing the risk of over- or under-selling products. The result is a more efficient and effective inventory management system that can help retailers make better business decisions and improve the overall customer experience.
3: Distributed order management reduces costs
Another obvious benefit of ship-from-store is the potential to reduce the financial cost and emissions to pick, pack, dispatch, and deliver each order. For example, in moving fulfilment from distribution centres to stores, Target US reduced the average per unit fulfilment costs by more than 50%. This is because orders can be fulfilled from the closest store, resulting in shorter delivery times and lower transportation costs.
While you may need to invest in additional training to make sure your employees are picking and packing correctly, giving them new technology like digital picking can make it much easier, while reducing the amount of human error.
4: In-store fulfillment increases dispatch speeds and improves customer satisfaction
Using nearby stores as distribution centres will inevitably speed up the dispatch process. By optimising the fulfillment process and harnessing existing resources, retailers can reduce the time it takes to fulfill and dispatch orders, which boosts both efficiency and customer satisfaction. Some retailers have reported a 300% increase in dispatch speed during peak trade, using an order management system with pull-based logic.