Ship From Store: Omnichannel Best Practice?

More and more brands are now shipping from store. Is ship-from store an option for your brand? This article explores the benefits and cost.

With Amazon and Zalando establishing same-day or standard next day delivery, brands are also looking shorten the lead time to consumer.  Retailers such as Zara and Target have already begun to ship from store and Nike will pilot ship from store in their Berlin stores as of this spring in a collaboration with Zalando.

Before diving into the feasibility of shipping from store, it is important to be clear on the benefits this would offer to your customer. First off, your customer will most likely not care where your product is shipped from and neither see nor appreciate the efforts in your supply chain.

One of the main benefits of ship-from-store is having a larger base of inventory. Stock that is sold out in the eCom (or shared eCom/wholesale warehouse) can be accessed in stores. This can be especially interesting to increase full-price sell-thru towards end of the season, reducing both end of season stock and markdowns in store.

Another benefit is shorter delivery lead times to the customer, something gaining in importance when many parcels from Amazon and other large platforms reach the customer within 1-2 days.

While many brands operate with one warehouse for their eCom stock, customers further away from the warehouse are typically facing lead times of more than 2 days. Shipping stock for example to a Finnish customer out of a store in Helsinki can be significantly faster than shipping from a warehouse in the BeNeLux region. However, one prerequisite is having a store base in several countries.

ship from store

(Source: Farfetch.com)

In a 2018 article I wrote about the advantages of same day delivery, driven predominantly by platforms such as Zalando and Amazon over recent years. Offering same-day delivery can drive sales by increasing conversion and lowered return rates. Farfetch, who ship orders from their marketplace sellers’ stores, even allow customers to search products with same-day or 90-minute delivery in certain cities.

amazon DCs in Europe as per February 2020

(Source: Wikipedia, February 2020; Map created in Batchgeo)

Understanding Omnichannel Supply Chain Requirements Is Key to Successful Ship From Store

Having real-time inventory information at SKU/Store level is essential to determine whether ship from store is even possible. This information also needs to be connected to the eCommerce back-end. As a next step, the back-end system will need to determine whether to (1) ship from store at all and (2) which store to ship from. Depending on who ‘owns’ the stock, this may only be possible in owned and operated stores.

Secondly, store staff needs to pick and pack the merchandise prior to pick-up (see this article for an overview of in-store delivery times). Depending on the time of day, this can be rather expensive. The time it takes to pick from the shop floor is significantly higher than in any warehouse, the cost per hour for store staff is higher, and there is an opportunity cost of not being able to serve other customers  in store while picking. Getting these processes right with changing store staff and only a handful of orders per week can be challenging and a reason to make ship from store an exception when usually shipping orders from an eCommerce warehouse.

However, bringing higher volumes through the stores can both reduce cost per parcel for pick-up, while increasing store efficiency, for example with one person doing several picks once a day. Efficiency would be highest when picking in the back of house (or dark store) rather than from the shop floor, turning stores into micro warehouses. Given the significantly higher rents for urban retail properties compared to out-of-town distribution centers, this is unlikely to work at scale for many brands, though.

While next day delivery can be seamlessly achieved with many logistics service providers when shipping from store, there are also opportunities to cover the last mile with delivery service start-ups, which oftentimes offer faster and more sustainable deliveries, for example with delivery bikes.

ship from store

Multichannel pilot at Zalando/Adidas (Source: Zalando)

Consider Marketplaces as an Alternative to Cover the Last Mile

Coming back to a point made earlier, your customer will most likely not care where the parcel is coming from.  Partnering-up with marketplaces can be another option of pulling stock ordered on the brand website from a partner warehouse with the result of faster lead times. This can be especially interesting for those brands also having many customers further away from their current retail locations.

Are you ready to ship from store?

You will have guessed it, shipping from store is challenging, as it encompasses the entire supply chain and involves retail, online and logistics teams and systems. Alongside the high costs of ship from store, this is one of the main reasons many brands do not offer this to customers yet. Getting these systems and processes right, however, will be crucial once more and more customers are getting used to same-day or next-day delivery.

 


About the Author:

Maximilian Gellert is passionate about transforming digital technologies into pragmatic every-day solutions for retailers. Combining consulting experience with industry functions in premium apparel and online grocery, he supports retailers and etailers in their digital challenges and last mile innovation. Read more of his work here or connect with him on LinkedIn.

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