In-store order fulfillment presents a great opportunity for retailers. Implemented successfully, in-store fulfillment enables retailers to decrease shipping costs, boost gross margins, increase supply chain efficiencies and more.
However, retailers are not optimised for ‘warehouse-like’ efficiency. They are designed to provide an excellent customer experience for walk-in shoppers.
This in-turn; presents challenges for retailers looking to implement order fulfillment within store.
For starters, most retailers don’t track inventory in real-time (such as on the shelf vs. in a shopping cart). This is one of the reasons why store inventory accuracy ranges between 50 and 80%.
Compare this to the 99% inventory accuracy that warehouses achieve with the use of sophisticated WMS tracking capabilities.
What traditional brick-and-mortar stores do have is the ability to deliver goods from prime locations, without the need for warehouses usually located at the city fringe. This in turn offers retailers the opportunity to deliver orders faster, cheaper and limit stockpiling inefficiencies.
The transition from a retailer to an in-store order fulfillment centre takes careful planning and execution. Implementing a fast and efficient order fulfillment process is one of the toughest challenges that retailers are faced with.
Below are three challenges of in-store fulfillment and how to overcome them:
Integration across retail systems
Retailers typically have existing POS, e-commerce, ERP and other retail systems. The challenge is integrating these systems across the supply chain with the addition of real-time inventory data, optimisation of fulfillment processes and systematic returns management.
In other words, current retail systems don’t support the functionality required to operate a store as a fulfillment centre or provide end-to-end visibility into customer orders and inventory.
But choosing the right technological solution can be quite a challenge in itself.
Lack of in-store inventory tracking
As previously mentioned, in-store inventory isn’t typically tracked in real-time with existing retail systems, meaning that stock on the shelf versus in a shopping cart isn't accounted for. This can lead to picker inefficiency such as a picker heading to an aisle only to find that a customer has already taken the goods.
In addition, lack of inventory accuracy in-store can lead to orders being sent to a store that doesn’t have the required stock or withhold an order because the system indicated that the store didn’t have enough inventory - missing a sales opportunity.
Lastly, a lack of real-time inventory accuracy could result in e-commerce order fulfillment at the expense of the availability of products for walk-in customers.
Fulfilling offline and online orders in-store
As already stated, in-store order fulfillment requires the optimisation of in-store processes. This includes the optimisation of order picking, packing, batching and shipping systems.
The cost of not optimising each of these processes can lead to inefficiencies, stock-outs, damaged goods and product returns.
Beyond this, using brick-and-mortar stores as fulfillment centres may also require other considerations. For example, how do you deal with product substitutions? Shipping the wrong item? Ageing products such as perishable items? Product returns?
Clearly, there are a lot of complex processes and considerations to be worked through before you can start seeing the many benefits of adopting an in-store fulfillment solution.
Below are tips and suggestions about how to get the most out of in-store fulfillment:
1) Implement the right technological solution
In an attempt to save on your investment, you might be tempted to invest in a patchwork of systems and processes. However, this is not sustainable and there are too many risks involved.
What you need is supply chain software that can fulfill orders in-store in a similar way to a DC - yet include store-specific requirements and processes. For example, a butcher would need to know the temperature of each item whereas a clothes retailer would need to know sizes and colours.
This software must include an in-store fulfillment platform, real-time inventory visibility, integration with other retail systems such as a web store and transportation systems.
2) Manage pick times
Picking processes are a crucial component of your fulfillment strategy. It’s especially important to optimise your pick path and pick rate times. Your pick path is the journey through the store that each picker takes to retrieve an item.
This is important as the travel time throughout the store is the most costly activity during the picking process.
In addition, you will need the right systems in place to direct pickers on a logical path through the store and to pick through a logical succession of items. This is in order to minimise fulfillment times.
3) Implement careful resource management processes
You need to rethink how you manage store resources; from a retail store to a warehouse. Analyse your schedules and ensure that you have the manpower to execute your delivery promises, regardless of time of day.
Introduce labour metrics to help keep track of how you are performing against your customer promises. In addition, analyse how individual employees are tracking and whether any incentives are helping with staff performance.
Lastly, your resource management processes need to ensure that customer orders are prioritised in order to meet dispatch deadlines.
In conclusion, adopting an in-store order fulfillment solution is no quick-and-easy task, however, if you follow these suggestions, you will be in a stronger position to make the most out of in-store fulfillment.
By quite some distance, your choice of technology and the implementation will be the two greatest factors influencing whether you can ensure speed, efficiency, and meet customer demands while remaining profitable, scalable and in a way that gives you an edge over your competition.
If you have any questions, talk to us about in-store fulfillment today.