Store fulfillment has emerged as a pivotal strategy for retailers aiming to create an omnichannel shopping experience. This approach allows businesses to leverage their existing infrastructure to meet the growing consumer demand for convenience, speed, and a seamless shopping journey. Store fulfillment is designed to complement traditional brick-and-mortar retail by enhancing online order fulfillment through physical stores.
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Key Statistics from McKinsey Highlighting the Importance of Store Fulfillment
- The availability of store-based pickup offerings surged by threefold from mid-2019 to mid-2020.
- 60% of consumers planned to continue using these in-store pickup services even after the pandemic.
- 59% of logistics executives forecast the adoption of in-store fulfillment within the next 2–3 years.
This guide will delve into the concept of store fulfillment, outlining its benefits, challenges, and essential principles for effective execution.
What is Store Fulfillment?
Store fulfillment is an omnichannel retail strategy where physical stores act as hubs for fulfilling online orders. It transforms traditional stores into "micro-fulfillment centers" that support various service models, allowing customers to enjoy faster and more convenient fulfillment. These models include:
- Buy Online, Pick Up In-Store (BOPIS): Customers can order products online and pick them up in-store, bypassing the need for home delivery.
- Curbside Pickup: Shoppers can place orders online and have them brought directly to their vehicles at designated curbside locations.
- Ship from Store: Instead of shipping from a central warehouse, retailers can ship products directly from nearby stores to reduce lead time and transportation costs.
Example: Walmart has integrated its 4,700 U.S. stores as fulfillment centers. Consumers can:
- Check product availability online.
- Choose in-store pickup or home delivery options.
- Return items easily to physical stores or other designated locations.
Benefits of Store Fulfillment
Cost Reduction:
- Local Shipping: Using nearby stores for fulfillment reduces transportation costs significantly.
- BOPIS Saves on Delivery: By allowing customers to pick up items in-store, retailers can eliminate shipping fees.
- No Need for Additional Warehouses: Stores serve dual purposes, which reduces the need for extra warehouse facilities.
Resource Optimization:
- Underutilized Space: Stores can use their available floor space or backroom areas to hold inventory.
- Employee Productivity: Store staff, who would traditionally handle in-store customers, can also handle online order picking and packing, thereby increasing overall productivity.
Customer Satisfaction:
- Faster Fulfillment: With local stores handling fulfillment, delivery times are significantly reduced, leading to improved customer satisfaction.
- Wider Product Selection: Customers have access to products across various channels—online, offline, or both—without constraints on stock availability.
- Convenient Pickup Options: Consumers enjoy a hassle-free, fast, and convenient pickup experience.
Sales Growth:
- Increased Foot Traffic: BOPIS can draw more foot traffic into stores, which often results in additional in-store purchases.
- Effective Inventory Management: Retailers can sell excess stock more efficiently, reducing overstock situations and avoiding markdowns.
- Cross-Selling Opportunities: With customers coming into stores for pickups, there is an opportunity for retailers to market other products, further driving sales.
Considerations Before Launching Store Fulfillment
Store Capacity:
- Space & Layout: Retailers must evaluate the size, layout, and capacity of each store to ensure they can accommodate fulfillment operations without compromising customer shopping experiences.
- Staff Availability: Staff members must be trained in fulfilling orders in addition to their usual tasks to ensure smooth operations.
Product Availability:
Retailers must carefully assess which products are suitable for both online and offline sales. Some items may only be feasible for in-store sales due to logistical challenges or perishability concerns.
Order Volume:
It's essential to balance order volumes across various store locations. Retailers must prevent overwhelming specific stores with too many online orders while ensuring efficient processing at other locations.
Inventory Stocking:
Maintaining real-time inventory tracking is crucial to avoid issues like stockouts or fulfillment delays. Efficient forecasting tools help ensure that stock levels are maintained adequately at all fulfillment centers.
Challenges of Store Fulfillment
Inventory Visibility:
Real-time inventory management is critical to prevent issues like stockouts or delays in fulfilling orders. Systems should allow for up-to-date tracking of both online and in-store inventories.
Inventory Allocation:
Accurate demand forecasting helps retailers decide where to place specific products to ensure they're available at the right locations, reducing the risk of overstocking in some stores and understocking in others.
Inefficient Fulfillment Processes:
Stores need to optimize workflows for order picking, packing, and shipping. Poorly executed processes can slow down fulfillment, increase errors, and reduce customer satisfaction.
Legacy Systems:
Many retailers still rely on outdated point-of-sale (POS), enterprise resource planning (ERP), and eCommerce systems. Upgrading or integrating these systems is essential to support the automation and seamless operation required for effective store fulfillment.
4 Principles for Effective In-Store Fulfillment
Invest in Technology:
Retailers should invest in modern software systems that can manage inventory and order fulfillment across various channels. Cloud-based tools offer scalability and flexibility, allowing retailers to adapt to changing business needs over time.
Train Store Staff:
Store employees need to be well-equipped with the necessary tools and training to handle the added responsibilities of picking, packing, and shipping online orders. Regular training and a clear understanding of roles will help maintain smooth operations.
Streamline Returns:
Retailers should provide easy and convenient return processes, such as buy online and return in-store (BORIS). This not only improves customer satisfaction but also reduces return-related complications for the retailer.
Stay Customer-Centric:
The primary goal of in-store fulfillment is to improve the customer experience. Retailers should continuously monitor customer preferences and adjust their fulfillment strategies to better meet these needs.
Conclusion
Store fulfillment is revolutionizing the retail landscape by merging the convenience of eCommerce with the tangible benefits of brick-and-mortar stores. By following key principles such as investing in technology, training staff, simplifying returns, and maintaining a customer-first approach, retailers can improve their operational efficiency, reduce costs, and offer a superior shopping experience.
Inspiration from Industry Leaders
Retailers like Walmart, Target, and Best Buy are prime examples of successful store fulfillment strategies. Their integration of omnichannel models shows how adapting store operations can boost efficiency and customer satisfaction. By taking inspiration from these industry leaders and tailoring the strategy to your business's needs, you can streamline operations, enhance profitability, and create lasting customer loyalty.
