Opportunities and Barriers of Scaling Ship from Store

The retail landscape is undergoing a dramatic transformation, fueled by the rise of eCommerce and the increasing demand for seamless omnichannel experiences. At the heart of this transformation lies the ship-from-store (SFS) strategy, a powerful approach that leverages local store inventory to fulfill online orders, offering significant benefits for both retailers and customers. In this Order Management Gurus discussion, the experts dive into the intricacies of SFS. The panel explores the operational, technological, and strategic considerations that underpin successful SFS implementation, and examines the critical "build vs. buy" decision that confronts retailers seeking to optimize their omnichannel fulfillment capabilities.

Order Management Gurus, Panel 6: Scaling Ship from Store: Opportunities and Barriers

Balancing the opportunity of fast, local delivery with the constraints of operations, technology and carriers.

Panelists:

• Nate Skiver, Founder, LPF Spend Management
• Leann Valli-Lenz Sr., Director Omnichannel Operations, Best Buy
• Helen Morris, VP of Product Management, Michaels Stores

Moderator:

• Chap Achen, VP, Product Strategy, Nextuple

The SFS Advantage: A Win-Win for Retailers and Customers (00:09:29)

SFS offers a compelling value proposition for both retailers and customers. By fulfilling orders from local stores, retailers can:

• Reduce shipping costs: Shorter distances translate to lower shipping expenses, especially for bulky or heavy items.
• Speed up delivery times: Local fulfillment enables faster delivery, often meeting the demands of today's "need it now" consumers.
• Improve inventory utilization: SFS helps prevent stockouts and reduces the need for markdowns by efficiently utilizing inventory across the entire network.
• Enhance the customer experience: Faster delivery, more flexible fulfillment options, and a more personalized experience contribute to increased customer satisfaction and loyalty.
  
  
  

Operational Excellence: The Foundation of SFS Success (00:14:53)

SFS is not without its operational challenges. To achieve peak performance, retailers must focus on:

• Accurate inventory location data: Knowing precisely where each item is located within the store is crucial for efficient picking and packing. This may involve implementing real-time inventory tracking systems and leveraging technologies like RFID to improve visibility.
• Efficient in-store processes: Streamlining workflows for picking, packing, and shipping is essential for minimizing labor costs and maximizing throughput. This may involve reconfiguring store layouts, implementing dedicated packing stations, and providing store associates with mobile devices and intuitive software.
• Leadership buy-in and store associate engagement: Securing buy-in from store leadership and empowering store associates to own the SFS process is critical for driving accountability and ensuring consistent execution. This may involve providing clear incentives, training programs, and ongoing support.
  
  
  

Carrier Strategies: Expanding Beyond the Usual Suspects (00:17:52)

While relying on a single national carrier can simplify logistics, leveraging multiple carriers, including local and regional providers, can unlock significant advantages for SFS. This allows for:

• Greater flexibility: Offer a wider range of delivery options, including same-day, next-day, and scheduled delivery, catering to diverse customer needs and preferences.
• Faster delivery speeds: Local carriers often offer faster delivery times within a specific geographic area, improving customer satisfaction and reducing the risk of missed delivery windows.
• Potential cost savings: Negotiating with multiple carriers can create competitive pressure and lead to lower shipping costs, especially for retailers with high SFS volumes and the ability to consolidate shipments.
  
  
  

KPIs That Drive Improvement: Measuring SFS Effectiveness (00:22:54)

Tracking the right KPIs is crucial for monitoring SFS performance, identifying areas for improvement, and demonstrating the value of the strategy to stakeholders. Key metrics to consider include:

• Order-to-delivery time: Measure the time it takes for an order to be placed, fulfilled, and delivered to the customer.
• On-time shipment rate: Track the percentage of SFS orders that are shipped within the promised timeframe.
• Inventory accuracy: Monitor the accuracy of inventory data at the store level to minimize picking errors and ensure efficient fulfillment.
• Pick and pack efficiency: Measure the number of units picked and packed per labor hour to assess productivity and identify bottlenecks.
• Customer satisfaction: Gather feedback from customers on their SFS experience to identify areas for improvement and enhance overall satisfaction.
  
  
  

Technology Trends: Empowering SFS with Innovation (00:25:48)

Advancements in technology are making SFS more accessible and efficient for retailers of all sizes. Key trends include:

• Order orchestration platforms: Sophisticated order orchestration solutions leverage AI and machine learning to optimize fulfillment decisions based on factors like inventory availability, delivery promises, shipping costs, and carrier capacity.
• Microservices architecture: Modular, API-driven architectures enable greater flexibility and scalability, allowing retailers to integrate best-of-breed solutions and customize their SFS workflows.
• Real-time inventory visibility: Technologies like RFID and advanced inventory management systems provide real-time visibility into store-level inventory, enabling accurate promising and efficient picking.
• Mobile-first solutions: Equipping store associates with mobile devices and intuitive applications streamlines workflows, improves communication, and enhances productivity.
  
  
  

Labor Strategies: Balancing In-Store and Online Demands (00:26:47)

Successfully scaling SFS without compromising the in-store customer experience requires careful consideration of labor allocation and store associate responsibilities. Key strategies include:

• Dedicated SFS teams: Creating dedicated SFS teams within stores can improve focus and accountability, ensuring that online orders are fulfilled efficiently without disrupting in-store operations.
• Cross-training and flexible roles: Cross-training store associates to handle both in-store and online fulfillment tasks can create a more flexible and responsive workforce, allowing for efficient allocation of labor resources based on demand.
• Clear incentives and performance goals: Aligning incentives and performance goals with SFS objectives can motivate store associates and drive accountability for efficient execution.
  
  
  

SFS and the In-Store Experience: A Delicate Balance (00:37:56)

Scaling SFS without negatively impacting the in-store customer experience requires careful planning and execution. Strategies to consider include:

• Inventory aging and allocation: Implement strategies to ensure that fulfilling online orders doesn't deplete in-store inventory and lead to stockouts for in-store shoppers. This may involve setting aside dedicated inventory for SFS or prioritizing in-store sales for newer items.
• Optimized warehouse locations: Strategically locate SFS packing and shipping areas within the store to minimize disruption to in-store shoppers and optimize workflows for store associates.
• Clear communication and signage: Communicate clearly with in-store customers about SFS operations and any potential impact on their shopping experience. Use signage to direct customers to appropriate areas and minimize confusion.
  
  
  

Unlocking Hidden Value: Missed Opportunities in SFS (00:39:37)

Many retailers fail to fully capitalize on the potential of SFS to drive revenue and enhance the customer experience. Key opportunities include:

• Accurate delivery promises: Leverage real-time inventory and carrier data to calculate and display accurate estimated delivery dates, taking into account local fulfillment options. This can significantly improve conversion rates and reduce cart abandonment.
• Personalized delivery options: Offer customers a choice of delivery options, including same-day, next-day, and scheduled delivery, based on their individual needs and preferences.
• Proactive communication: Keep customers informed throughout the fulfillment process with timely updates and notifications, building trust and enhancing their overall experience.
  
  
  

Overcoming SFS Challenges: Building Confidence and Driving Execution (00:43:36)

Concerns about store execution, fulfillment accuracy, and potential impact on the in-store experience can hinder SFS adoption. To overcome these challenges, retailers should:

• Conduct rigorous testing: Thoroughly test SFS processes and systems to identify and address potential bottlenecks and ensure smooth execution.
• Implement robust training programs: Provide store associates with comprehensive training on SFS procedures, technology tools, and customer service best practices.
• Establish clear performance metrics and accountability: Set clear expectations for store performance and track key metrics to monitor progress and identify areas for improvement.
• Foster open communication and feedback loops: Encourage open communication between corporate and store teams to address challenges, share best practices, and continuously improve the SFS process.