Are stores the answer to peak-time online fulfillment challenges?
A post-holiday review of online fulfillment by Kurt Salmon identified shipping from stores as a largely unutilized but highly beneficial way to fill orders during peak selling periods.
The study’s examination of orders placed on the last day that retailers guaranteed delivery by Christmas found that 15 percent did not reach their destinations in time. Most (83 percent) of the delays occurred with expedited one- or two-day shipments, with retailers rather than carriers responsible for a majority (56 percent) of the overall delays.
The analysis, in partnership with StellaService, included a review of orders containing multiple items from over 70 retailers placed on Cyber Monday. It found that a staggering 38 percent of orders originated from two or more shipping points (including stores and distribution centers). Nearly 10 percent came from three or more locations. Along with potential delays, Kurt Salmon said shipping costs essentially double to account for the additional parcel shipped from a second location. Only 14 percent of orders were shipped directly from stores, a method that tended to lead to significantly shorter delivery times.
Improving shipping from store — which are often better stocked and better able to get a shipment out the door quickly — could help reduce both excessive packages and shipping points. Effective inventory tracking software and developing strong relationships with carriers are key to enabling in-store employees to efficiently pull online orders, the study found.
"Delivery partner relationships, which don’t usually exist at the store level or which aren’t tailored to meet the different turnaround time needs of ship-from-store, can heavily impact success," wrote Michelle Bogan, a partner in Kurt Salmon’s Retail and Consumer Products Group, in the study. "Moreover, inventory balance can be a challenge, with retailers struggling to find ways to effectively track their in-store inventory against what they have in their distribution centers."
Other ways to improve peak-time online delivery cited in the study included:
Omnichannel communication: Making sure the fulfillment centers’ demand and capacity levels are ready for marketing’s promise of last-minute shipping;
Realistic last-ship dates: Better execution systems and planning tools — both at fulfillment centers and at the store;
Carrier Relationships review: Processes with carriers should be continually reevaluated to improve on the delivery model;
Updated forecasting: Stores’ forecasting tools should acknowledge that Cyber Monday has outpaced Black Friday weekend purchases for two straight years.
- 2014 Peak-Season Shipping: A Kurt Salmon Special Report – Kurt Salmon
- Retailers Still Fall Short of Online Shipping Promises – Bloomberg Businessweek
Can stores be expected to act like distribution centers for online orders during peak selling periods? What technology investments and processes will have to be put in place to make to make it work?