The New “Ship From Store” Reality


September 12, 2013 - SCMR Editorial

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.



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!

Recent Entries

Join Industry Expert Adrian Gonzalez for this educational webinar on the tenets and the benefits of Closed-Loop Operational Management. You’ll learn how Closed-Loop Operational Management optimizes orders, inventory, and transportation concurrently, and how it is able to optimize large-scale problems on a daily basis.

In a separate conference call following CP’s third quarter earnings release call yesterday, CP CEO Hunter Harrison make myriad convincing points for a merger between CP and CSX and offered up his take in general industry M&A as well.

Seasonally-adjusted (SA) for-hire truck tonnage in September checked in at 132.6 (2000=100) for the second straight month, remaining as the current all-time high level for the second month in a row, with November 2013’s 131.0 now the second best month recorded.

Ahead of its third quarter earnings call this Friday, freight transportation and logistics titan UPS rolled out rate increases for 2015 that are set to take effect on December 29, 2014.

The 'Internet of Things' or IoT is a term that has rapidly taken center stage in business and consumer technology circles, with tremendous amounts of hype in both. Don't be distracted if some of the hypothetical consumer examples of the IoT seem far-fetched; the trend has serious implications for businesses. This complimentary whitepaper takes a look at some of the opportunities afforded by the Internet of Business Things.

Article Topics

News · Technology · Management · Software · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.