By Jeff Neville
Is rapid delivery a key component of your retail strategy?
Just a few years ago, retail leaders such as Amazon, Target, and Best Buy began dominating the ecommerce and rapid delivery space. By 2020, their shoppers had come to expect an around-the-clock, online shopping experience resulting in same-day or next-day delivery.
While most retailers don’t have dedicated delivery fleets, many have brick-and-mortar stores and onsite staff they can put to use to meet today’s expectations for rapid delivery. One popular solution is introducing a “ship from store” (SFS) method of fulfillment. What was once perceived as a convenience offering for the traveling customer, SFS is now seen as a requirement to meet customer expectations and manage operational risk.
What Is Ship from Store?
The “ship from store” fulfillment method leverages local brick-and-mortar stores—and onsite employees—to fill orders instead of depending on ecommerce fulfillment center staff. Ship from store strategies often prioritize shipping orders from the store closest to the customer, reducing lead times and shipping costs and expediting order fulfillment.
Retailers who haven’t yet launched a ship from store initiative or are reevaluating their fulfillment programs in a post-pandemic world need to address one question: what is the strategic intent?
Intent Is Critical to Ship from Store Initiatives
Today, shipping from stores is an integral element of a competitive retail strategy, but each company has a different motive for implementing this solution. The most common drivers are:
1. We are looking to reduce our ecommerce cost of fulfillment
Ship from store strategies can help retailers reduce shipping costs. Instead of fulfilling an order from a warehouse across the country, retailers ship products from the store closest to the customer. This approach minimizes the number of shipping zones that the package travels, thus reducing the shipping charge.
2. We are looking to leverage underutilized store labor
Brands with brick and mortar stores already pay for onsite employees who have downtime when foot traffic is low. Of course, retail workers have other duties, but once they’ve cleaned the backroom, received products, and answered emails, there are often slow periods between helping customers. Staff can fill their paid time by performing ship from store and click and collect transactions.
3. We are looking to differentiate our customer experience
The most successful retailers take every opportunity to surprise and delight their customers, and ship from store is one way to achieve this goal. For example, customers who expect an order to take multiple days to arrive may receive it the same day or the next day when it ships from a store close to where they are located—an outcome that will undoubtedly leave them feeling satisfied.
Some brands build personal connections with their customers by tucking thoughtful, hand-written notes from the store manager into their packages. These gestures make customers feel cared for and inspire faith in both the brand and the local store.
5 Considerations for Adopting a Ship from Store Fulfillment Strategy
While a ship from store strategy is quickly becoming a must-have for competitive omnichannel retailers, careful consideration and planning are required to ensure successful outcomes:
1. Store operations
First, it’s important to consider and plan for different elements of store operations. Packing and shipping supplies must be added to the budget and sourced. The store layout must be evaluated to determine where the fulfillment processes will be depending on the size of the backroom.
Some of our clients are also looking at store planograms and moving product based on ship from store selling frequency, putting the high volume product closer to the ship from store station.
Finally, a balanced scorecard must be developed and published that tracks the KPIs based on the retailer’s strategy and objectives.
2. Adequate staffing to meet demand
Ship from store strategies are only successful if retail workers are onsite to pick, pack, and ship orders on time and tend to cash-and-carry shoppers.
Store operations must also take into account the different pay rates for retail associates versus the pay rate for a ship from store payroll associate.
3. Retail rollout and associate training
From planning the store layout to packaging and shipping products optimally to preventing them from becoming damaged, store associates must be trained to carry out the initiative effectively.
Some of the best trainers in this area can be found not in the retail operations training department but in the team that trains distribution center resources.
4. Technology stack
A robust technology stack is required, including an order management system (OMS) that captures all relevant data, software that confirms inventory accuracy, and shipping stations equipped with the right tools to track and verify orders.
5. Inventory accuracy
A ship from store program is only as good as a retailer’s inventory accuracy at the store level. Rejected orders and order splits across stores both increase the program’s total cost of fulfillment and negatively impact the business case.
Three key capabilities we are seeing are the ability to have near real-time inventory in the OMS that takes into account the in-store sales, the ability for a store to highlight inventory errors and have them quickly resolved, and a process that directs stores to perform cycle counts based on order rejects and cancellations.
6. Cross-functional integration
Some brands prefer to send all orders to existing stores, while others have opened hubs as dedicated fulfillment centers. One current trend has retailers partnering with malls to use empty storefronts as fulfillment centers.
These initiatives require constant cross-functional communications and new business processes to ensure that the company is optimizing inventory levels and gross margin.
How Sophelle Helps Retailers Develop Ship from Store Strategies
Ship from store strategies are only successful if a retailer has a clear customer experience vision and access to real-time, accurate data about their inventory, staffing level, and ecommerce demand. If retailers aren’t sure they can fulfill orders effectively to meet ecommerce demand, a ship from store initiative runs the risk of failure and may negatively impact lifetime customer value.
At Sophelle, we help clients develop strategies, build customer experiences, and analyze their data to create solid ship from store programs. The focus of this work is to help our clients answer strategic questions.
Is there underutilized labor at my stores that I can deploy to ship from store orders?
We helped a client understand the available time the store team might have based on a time and motion study and the development of a store label evaluation tool.
The client was able to determine the number of employees necessary to manage both store traffic and the number of ecommerce orders if they pursued a ship from store strategy.
Can my stores handle more ship from store volume based on my current labor budget?
Recently, we built a model for a retailer to determine the staffing required to facilitate in-store activities and ship from store operations. We then mapped that data against our client’s ecommerce demand, considering the available labor in the store.
We presented our results in a color-coded format:
- Green represents timeframes in which our client already had adequate onsite staffing to support the ship from store initiative.
- Yellow represents periods that are challenging for current staff to manage ship from store tasks and other duties.
- Red indicates intervals where more resources are needed to meet fulfillment demands. (Unsurprisingly, the “red” timeframes occurred mainly around the busy seasonal periods.)
With our findings, the operations team could then accurately develop a ship from store strategy and build labor models more efficiently.
How do I compare with my competitors in the eyes of my customers?
For another consumer goods client, we deployed a secret shopper initiative to uncover opportunities to improve shipping times and customer service.
We provided a post-purchase assessment to showcase how our client compared alongside several competitors and recommended optimizing and enhancing their ship from store tactics. The data was enlightening for our client and helped their leadership team take strategic action to improve their retail strategy.
Beyond Ship from Store: Same-Day Delivery
Today, ship from store is a viable and competitive component of a successful retail strategy and is quickly becoming a baseline initiative for many retailers, which begs the question: what’s the next evolution for an industry always on the cutting edge?
Soon, we expect to see even more retailers surprise and delight customers with same-day delivery. Big brands such as Target and Best Buy are already working toward this goal by contracting a third party to deliver ecommerce orders.
Winning retailers will leverage their access to real-time inventory data, local brick and mortar stores, and third-party delivery companies to train their customers: if you want your product fast, come to us.
Is your company looking to launch or retool a ship from store initiative? Let the experts at Sophelle help you craft a retail strategy that fits your business and budget. Contact us today to learn more.