Is ship-from-store a proven omnichannel benefit?
Many retailers are now using their stores as fulfillment centers to ship a small portion to upwards of 20 percent of the product they sell online.
In the third quarter, Best Buy’s online sales expanded 21.6 percent, with about half of the gain attributed to the chain-wide rollout of ship-from-store capabilities in January 2014. Others are using a hub store model in each region. For instance, Walmart is using 83 Supercenters for ship-from-store and Target, 136.
Besides significantly improving inventory availability to fulfill online orders, Best Buy has said ship-from-store boosts margins because exposing clearance inventory to both retail and online customers spreads markdown risks. The need to reallocate inventories is also lessened. Finally, ship-from-store promises to speed shipments to nearby customers, a feat expected to support same-day delivery.
On the downside, several recent articles have pointed to the challenges of using store associates as pickers. Finding items is naturally harder in a store versus a row-by-row, automated warehouse, and items inside a store often get lost due to misallocation by stockers or having been moved by shoppers.
Working around shoppers to find items is also arduous. In some cases, associates get caught fulfilling orders instead of helping customers. Designated pickers also answer questions from shoppers, a mandatory delay preventing quick online order turnarounds. To address traffic distraction, Macy’s associates pull the bulk of online orders before the store opens, according to the Wall Street Journal. Retailers also need to set up sophisticated packaging and shipment departments in their stores.
Peter Sheldon, at Forrester Research, told the Pittsburgh Post-Gazette "a distribution center is still far more efficient at packing and picking, and can do it at a lower cost than a store."
Many stores are also carrying greater inventory to not only support online orders but in-store pickup. Finding storage space for the extra goods and avoiding excess inventories become challenges.
In a blog post, Jeff Ashcroft, director of business development at SCI Group, the provide of supply chain solutions, pointed to the challenges around distracted sales staffs and rising store out-of-stocks coupled with retail costing five to tens times more per square foot than warehouse space. He labeled ship-from-store "truly a flawed solution to the omni-commerce puzzle."
- Can Wal-Mart Clerks Ship as Fast as Amazon Robots? – Wall Street Journal
- Crunch Time for FedEx and UPS as Last-Minute Holiday Shipping Ramps Up – New York Times
- Stores seek edge over e-tailers with online orders – Reuters
- Optimizing Fulfillment: From Any Store to Any Customer – Apparel Magazine
- In-store pickup challenging stores to handle inventory – Reuters
- Best Buy has an edge over Amazon as stores serve as shipping hubs – CBS Marketwatch
- Store’s backroom takes on a key role in retailers’ battle with online rivals – Pittsburgh Post-Gazette
- Beware the Ship-From-Store Spin – Linkedin
Are retailers overestimating the ability of stores to efficiently pick and pack online orders? What are the obvious and less obvious challenges retailers face using stores as fulfillment centers?