The New “Ship From Store” Reality

{lm_summary}

By ·

Editor’s Note: This thought leadership piece will also be featured in next week’s Executive Briefing.

The move to a centralized, high-volume distribution centers made sense. Economies of scale, automation and lower labor costs worked together to increase efficiency.

Now, some retailers have found the pendulum has swung too far. These managers are broadening their shipping and logistics network to include customer shipping of web orders from local stores—and finding ways to reduce costs, satisfy customers and grow same-store sales.

Omni-channel retail gives customers more ways to place orders and more ways to get merchandise than ever before. This increases customer convenience but creates new challenges for the business. With more orders coming from the web, same-store sales go down while overall revenue may be going up.  While not a specific challenge, it is creating a new challenge for retailers in terms of fulfillment.  Should retailers reduce their local presence that is a key part of their branding structure?  Is the centralized distribution model their future?

An emerging ship-from-store approach balances the need for efficiency with the need to keep and the brand local. With this approach, retailers can balance customer fulfillment between central distribution center and stores within the same zone as the customer. Doing this allows stores with lower sales to become “zone fulfillment centers” bolstering their productivity while also reducing shipping costs by shipping within a given zone area.

In balancing assets and productivity the retailer must solve two new problems.  The first is the ability to route to stores that can fulfill from existing stock.  With Distributed Order Management software, a retail organization can do what’s required to route orders to any channel of fulfillment.  The second is an emerging solution, Distributed Parcel Management, which supports multi-carrier parcel shipping from both the distribution center and the local store.  The implementation of the technology is a bit different between the channels, but the new technology enables seamless solutions across channels. 

For most retailers, keeping up with market demands will require a new mindset.  But when you open the newspaper this week and see that a retailer has reporting an increase in same store sales, chances are you’ll know who’s already making the transition to a ‘ship from store’ approach.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

· All Topics
Latest Whitepaper
Improving Packaging: The Cost of Shipping Air is Going Up
Retailers and manufacturers that insist on using inefficient and sloppy packaging methods—oversized boxes, inefficient packaging, poorly constructed palletized contents—are paying for their mistakes in sharply higher freight rates. Pitt Ohio White Paper, Logistics White Paper, Dimensional Packaging
Download Today!
From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
2016 State of Logistics: Third-party logistics
2016 State of Logistics: Ocean freight
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo