Should all online orders be fulfilled by stores?
As part of its advancing omnichannel strategy, Zumiez, the teen chain focused on skate, surf and other action sports, is closing its e-commerce fulfillment center in Edwardsville, KS and will shift to “primarily store fulfillment of online customer orders.”
The shift to a “fully localized fulfillment model,” according to the retailer, will “help better position Zumiez to provide its customers with the ideal brand experience of trend right and unique products — how, where, and when they want it.”
Zumiez adds, “Localization is a key part of Zumiez’ omnichannel strategy that it believes will drive long term market share by leveraging the strengths of its store sales team, providing better and faster service to its customers, improving product margins, and providing additional selling opportunities.”
A one-time charge of $1.3 million, or three cents a share, will be taken in the fourth quarter to cover severance, asset write-offs, moving costs and facility closure. Edwardsville had fulfilled online orders for the past four years.
In the same statement, the company said it will absorb another $1.0 million in costs in 2016 to integrate its online and in-store POS systems, order management system and transportation management system, also as part of its omnichannel focus.
On its third-quarter conference call in early December, Rick Brooks, CEO, ranked Zumiez among the leaders in working to build an omnichannel experience among retailers. The chain is “just being overwhelmed” by the consumer’s shift toward digital channels that’s being marked by eroding mall traffic and mobile expanding “at amazing rates,” he said.
Chris Work, Zumiez’s CFO, added that a seamless shopping experience should reflect “one inventory pull” that is “available to everyone through every channel in every way.”
- Localization of Web Fulfillment Operations; New POS System Roll Out; Earnings Guidance Update – Zumiez
Would having all online orders shipped from stores lead to greater efficiencies in the long run than flowing from distribution centers and other sources? How would you rate the pros and cons of such a “fully localized” fulfillment model?