Turning Stores Into Omnichannel Fulfillment Hubs

Praful Karanth

Instant gratification, engaging shopping experiences, and customer-controlled delivery options rank high on every consumer’s list. But for brick-and-mortar retailers, regardless of size, delivering on those promises is perhaps their best shot at disrupting some of the world’s most prominent e-commerce leaders. Traditional brick-and-mortar retailers must begin leveraging their stores to become fulfillment centers

A delightful customer experience always ends with acquiring their complete order when and where they want it. While last-mile delivery is expensive and challenging for retailers, it’s a significant differentiator that cannot be ignored.

A roster of retailers have already rolled out same-day delivery through a crowd-based logistics network using carriers such as Instacart, Lyft, and Uber as well as traditional third-party providers such as DHL. And many more are bound to offer the service as it becomes the standard in everyday retail consumer experiences.

Why customer-controlled delivery matters

There will always be retailers that don’t buy into the opportunity to beat e-commerce titans at their game. And to them, I ask, “What are you waiting for?” They may have steady store traffic and a few distribution points, but ultimately they will have to deliver the convenience, value, and speed that every consumer demands and deserves.

Think about the last time you needed to purchase something and have it in your hand almost instantly. Did you have to spend a minimum amount to qualify for the fastest shipping option available? Were you notified that your order would be split and shipped separately on different dates? Or worse, was the wrong item delivered?

These consumer experiences can strike a massive blow to a retailer’s reputation. When multiple orders cannot be delivered as promised due to inaccurate or limited inventory visibility or limited logistics operations, consumers will not hesitate to go elsewhere for their next purchase. And yes, if that store gets it right, consumers will come back again and again, opening the door to long-term loyalty.

How to establish a foundation that outcompetes e-commerce titans

From a store operations perspective, it’s critical to enable every associate to pick and ship an online order within an hour, two hours, three hours, or at whatever delivery window individual consumer demands. But this preferred state is achievable only if the brick-and-mortar retailer takes the necessary steps to support the trifecta of real-time inventory accuracy and visibility for customers, flawless execution of in-store fulfillment, and last-mile delivery to the customer’s home.

1. Real-time inventory accuracy and visibility for customers

Order taking – online and offline – must be based on inventory and pricing information that’s accurate and reflective of the stock available at stores that are close to the consumer’s location. Retailers need a unified view of inventory across their supply chain, including items in transit and in stores.

By integrating your inventory system with point-of-sale and e-commerce platforms, information across all three technologies is updated in unison every time a stock item is replenished, returned, exchanged, or purchased. It’s important to note that real-time inventory may never be 100% accurate for two reasons: one, movement from the physical or virtual shelf to the shopping cart before checkout, and two, theft. But at least with this integrated digital approach, retailers can consider stock scanned through a controllable process to reflect near-total accuracy.

2. In-store fulfillment

Promising complete orders is always easy when you have endless aisles of inventory just waiting to be sold. However, this dream scenario is not at all cost-efficient and sustainable for brick-and-mortar retailers due to the unpredictability of store traffic and real estate. But what is achievable is delivering on the consumer expectation that items showing available online are actually available in-store.

This capability can be a considerable competitive advantage, especially when heading off e-commerce giants. To be successful in this area, retailers need to make order picking a function of the store associate to make that short delivery window. Consumers don’t mind driving to their nearest store to pick up their order if that’s all they need to do to get their products almost “instantly” without paying for premium delivery fees.

New technologies like heat mapping, embedded sensors, digital store tags, and connected assets allow customers, associates, and store managers to interact with each other based on geographic location and inventory availability. In addition to infusing greater customer engagement, these technologies set the stage for store associates to reasonably fulfill in-store orders in a matter of minutes, which is upwards of 80% faster than the online competition.

3. Last-mile delivery

Traditionally, retailers have focused and perfected their upstream logistics (from supplier to distribution center to stores), but have struggled with their downstream delivery network (from stores to consumers). And the growing demand for “buy online, ship from store” (BOSS) has made this challenge even more critical.

Aside from some major players such as Instacart and Uber, the freight industry’s involvement in last-mile delivery is largely fragmented with small and less sophisticated carriers. This has resulted in a lack of in-transit order visibility (for consumers and retailers) and high supply-chain costs due to poor planning and scheduling. This is the critical last leg of the consumer’s journey that will make or break their shopping experience and loyalty.

Customer-controlled fulfillment and delivery: A must-have for all brick-and-mortar retailers

Brick-and-mortar retailers are feeling the pressure of an increasingly aggressive e-commerce market. However, they can certainly provide consumers with a seamless brand experience and leverage their stores to offer the convenience and speed that formidable competitors promise. After all, Alliance Data research found that 75% of customers still want to see a product in-store, something pure e-commerce retailers can’t do.

With a combination of technology, change management, and process discipline, stores can gain real-time insight into orders generated outside their four walls. More importantly, they can deliver on those orders with a level of excellence that keeps and retains customer loyalty, while increasing store associate engagement with customers. According to Forrester Research, retailers experience a 10% to 30% increase in online conversion rates when they offer to ship from the store – and execute that “perfect order.” And if that’s not enough, IDC predicts that more than 50% of consumers will name fulfillment execution as a top reason for loyalty by 2020.

So what are you waiting for? Isn’t it time to get serious about delighting your customers with the best experience that exceeds their expectation?

Grow your customer base and increase profits by moving to a single, real-time retail platform with the help of SAP’s retail solutions

This article originally appeared on Total Retail Report.


Praful Karanth

About Praful Karanth

Praful Karanth is the Industry Advisor for Retail Hardlines and Supply Chain for Consumer Industries that includes Retail, Consumer Products and Wholesale Distribution companies. Praful has 30 years of supply chain and post-merger integration (PMI) experience as an industry practitioner and strategy consultant advising leading retailers and consumer product companies on industry and strategic priorities ranging from Sourcing and Procurement to Supply Chain Planning and Execution. Praful is also an advisory board member at Texas Christian University’s (TCU) Center for Supply Chain Innovation (CSCI) and at Florida Gulf Coast University’s (FGCU) Supply Chain Advisory Board.