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5 Ways Retailers Increase Profit with Ship From Store Programs

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Savvy omnichannel retailers are continuously upping their game to bring outstanding experiences to consumers, regardless of whether they are online, in stores, or on phones with contact centers.

Many retailers have deployed ship from store programs, fulfilling online orders by shipping from stores, instead of from warehouses, to improve customer experience. Benefits include:
* Saving a Sale: Shipping from stores when an item is out of stock in warehouses
* Faster and Cheaper Delivery: Shipping from the store closest to the customer
* Optimizing Inventory: Increasing inventory turns by shipping from overstocked stores

See our slideshare to learn how omnichannel retailers are using ship from store strategies to improve customer satisfaction while increasing topline revenue and margins.

Published in: Retail
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5 Ways Retailers Increase Profit with Ship From Store Programs

  1. 1. Sources: (1) U.S. Department of Commerce, 2017, (2) Pew Research Online Shopping and Ecommerce Survey, 12/19/16, (3) Retail Dive Survey, 2/22/2017 Retail Landscape – Despite double-digit growth, ecommerce represents only 10% of US retail sales Brick-and-Mortar • $4.4 trillion U.S. sales in 2016 1 • 2.9% growth vs. 2015 ($124B) 1 • ≈90% of total U.S. retail sales 1 • 64% of Americans indicate that, all things being equal, they prefer buying from physical stores to buying online 2 E-Commerce • $395 billion U.S. sales in 2016 1 • 15.6% growth vs. 2015 ($53B) 1 • ≈10% of total U.S. retail sales 1 • 79% of Americans make purchases online. 2 • 67% of millennials and 56% of GenX “prefer to search and purchase on e-commerce sites rather than in-store” 3 © Pulse Commerce 2017 - All rights reserved 2
  2. 2. Omnichannel Retail combines the power of online and offline retail to delight customers Omnichannel Retail • Serve customers online, in stores, via contact centers and much more • Deliver amazing, consistent experiences across channels • Omni-channel capabilities include: • Ship from store • Click & Collect (Buy online, pickup in store) • Research online, purchase in store • Research in store, order online • Buy online, return to store © Pulse Commerce 2017 - All rights reserved 3
  3. 3. Ship from store refers to fulfilling online orders from brick-and-mortar store inventory Distribution Center Warehouses are stocked with products to be redistributed directly to consumers Ship From Store Retailers can use stock from their store inventory to fulfill and ship orders © Pulse Commerce 2017 - All rights reserved 4
  4. 4. Ship from store improves shipping cost and speed, 2 factors that heavily influence online purchases © Pulse Commerce 2017 - All rights reserved 5 Source: Big Commerce, “Omni-Channel Retail in 2017: What Brands Need to Know and Modern Consumer Shopping Habits” 80% Shipping Cost and Speed
  5. 5. Benefits – Ship from Store reduces delivery times © Pulse Commerce 2017 - All rights reserved 6 Toys-R-Us: 94% of ship-from-store orders shipped within two days during peak season.1 Best Buy: 2 day reduction in average shipping time after implementing Ship from Store.2 Target: Ship from store contributed to 3-day reduction in average delivery time.3 Sources: (1) Kurt Salman Associates, “Ship-from-Store: If You Haven’t Started Yet, You’re Dangerously Behind.” (2) Stella Service, 1/7/2015, “2014 Fulfillment Coverage, Trends in Shipping, Delivery, Returns.” (3) Stella Service, 10/1/2014, “Target Delivers in Less Than 3 Days Now” Faster Delivery • Deliver from store closest to shopper • Deliver from store when DC out of stock
  6. 6. Benefits - Ship from Store reduces shipping costs Lower Shipping Cost 20% shipping cost reductions from fulfilling within the shipping delivery zone Ship from store provides low-cost and high-speed delivery by distributing “warehouses” and effectively putting “fulfillment centers” relatively closer to shoppers. © Pulse Commerce 2017 - All rights reserved 7 Forrester: Retailers with an operational ship-from-store program have the opportunity to ship locally from a store in geographic proximity to the customer’s delivery address…. … Consider that the standard cost of shipping a one-pound package via UPS ground from New York State to California is $7.71, versus $6.24 for shipping the same package within California.”
  7. 7. Benefits - Ship from Store optimizes inventory to increase topline revenue and improve margins Inventory optimization Smart distribution from warehouses and stores boosts revenue and margins • Reduce markdowns by shipping from overstocked stores • Ship from stores when warehouses are out of stock • Ship from another store when local store is out of stock Revenue and Margin Increase 30% Online sales increase at American Apparel after starting to use stores as backup fulfillment centers. . 39% online sales bump at Nordstrom’s attributed to integrating online and in- store inventories. Source: Kurt Salmon Associates, Ship-from-Store: If You Haven’t Started Yet, You’re Dangerously Behind © Pulse Commerce 2017 - All rights reserved 8
  8. 8. Benefits - Ship from Store increases the number of SKUs available for online purchase Expand Online Assortment Increase available online SKUs without capital investment in distribution centers © Pulse Commerce 2017 - All rights reserved 9 66% of our total unique SKUs are only on our store shelves, not in the warehouse. GameStop saw a 20% lift in sales of goods that were not in the warehouse by allowing customers to view all products in the store online, and letting employees in nearby stores view on-shelf inventory as well. Source: Chain Store Age, “GameStop scores big with Ship From Store”
  9. 9. Challenges – Stores must have space dedicated to packing and shipping, and need software to manage operations Physical space and tools • Physical stores are not designed as warehouses. • Retailers must find room for packing tables, materials, and staging. • Software is needed to assign orders, print packing and shipping labels • Employees may only be able to fulfill when stores are empty (off hours) © Pulse Commerce 2017 - All rights reserved 10
  10. 10. Challenges – Employees must be trained, and their incentives need to align with offline and online success Employee training and incentives • Employees need to learn picking and packing procedures “Store associates often send out poorly packaged items because they have not been properly trained” – or-- “they do not see their work duty as being a warehouse associate.” • Employees may focus on store customersm “Store associates, especially commission-based employees, sometimes hold back ‘best sellers’ rather than fulfill online orders, to ensure items are available for their clients.” © Pulse Commerce 2017 - All rights reserved 11 Source: Retail Wire, 3/29/2016, “Store Fulfillment Is Creating Associate Tension”
  11. 11. Challenges – Visibility into real-time inventory across all channels is required to succeed Omnichannel Inventory Visibility Success hinges on a real-time, integrated, enterprise-wide view of orders & inventory Real-time, instantaneous decisions, include: • Which stores can fulfill the entire order? • Which store is sitting on too much inventory? • Which store is closest to the ship-to address? • If in stock, can our employees find it? © Pulse Commerce 2017 - All rights reserved 12 Source: Practical Ecommerce 6/5/2017, “Ship from Store Fulfillment a Must for Brick and Click Retailers”
  12. 12. Resolving Challenges – An Enterprise Order Management and Inventory Platform enables Ship from Store Success Order & Inventory Platform • Real-time inventory visibility and control across the entire enterprise • Intelligent Order Routing identifies the optimal warehouse or store for fulfillment • Streamlines fulfillment with order prioritization, packing slips, shipping labels © Pulse Commerce 2017 - All rights reserved 13
  13. 13. Resolving Challenges – Retailers must assign employees to fulfill orders, and decide what KPIs they’re to improve Business Decisions • Staffing: Who will fulfill ship-from-store orders? • Which goals will we seek to achieve? • Expand inventory / avoid stockouts? • Maximize full price sales / Ship from overstocked stores? • Save on shipping costs? The answers will dictate the intelligent order routing rules © Pulse Commerce 2017 - All rights reserved 14
  14. 14. Pulse Commerce Order & Inventory Platform © Pulse Commerce 2017 - All rights reserved 15 Pulse Commerce Order and Inventory Platform is the central nervous system of your omnichannel commerce operations, providing unprecedented real-time, enterprise-wide visibility and control of all orders, inventory and customers.
  15. 15. Connect with us! Pulse Commerce 855 Main Street, Suite 400 Bridgeport, CT 06604 Tel: (877) 243-3612 sales@pulse-commerce.com Webinars • How to Market and Sell on Pinterest • Building an Effective Digital Loyalty Program in the Amazon Age Pulse Commerce • Learn more about our Order Management Platform Whitepapers • 5 Hidden Costs To Avoid When Buying an Order Management System • Homegrown, On-Premise, or SaaS: Which Order Management System is Right for me? ADDITIONAL FREE RESOURCES

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