Is ship from store fulfillment right for your retail business?

[Updated post from September 28, 2021]

Whether it's returning online orders in-store or collecting purchases via curbside pickup, consumers are demanding ever-higher levels of flexibility in the retail experience.

This is where implementing a ship from store fulfillment strategy can make all the difference to your ability to offer rapid delivery and increase sales. By embracing the power of omnichannel fulfillment, retailers can gain a competitive edge and keep shoppers coming back.

However, shipping from store is not a good fit for every retail business. Successful store-based fulfillment requires an extremely high level of inventory visibility, as well as sufficient staffing levels at your storefront to manage both online orders and in-store shopping.

So what is ship from store fulfillment, and how do you know if it's right for your brand?

TL;DR

• Ship from store fulfillment is a strategy where a physical retail store fulfills and ships online orders directly to customers, leveraging inventory located in the store.
• When used effectively, ship from store allows for faster and cheaper shipping, as orders can be fulfilled within a specific radius of the store using regional or crowd-sourced carriers.
• However, ship from store activities do have a potential negative impact on the in-store experience, as well as having to manage the complexity of unified inventory management.  

What is ship from store fulfillment?

Ship from store is a store-based fulfillment method where a physical retail store fulfills and ships online orders directly to the end customer, rather than using traditional distribution centers.

Rather than sending inventory to the store for fulfillment, ship from store uses inventory located in at storefront to fulfill online orders. Store associates are responsible for the end-to-end fulfillment process, including picking, packing, labeling, and shipping products. This differs from curbside pickup or BOPIS (Buy Online, Pickup In-store) where customers come to the store to pick up their order rather than getting it shipped to their home.

In essence, ship from store fulfillment transforms storefronts into omnichannel locations that serve both in-store and online shoppers.

How does ship from store work?

Ship from store fulfillment involves the following steps:

1. The customer places an order through the retailer's e-commerce website or other online channel.
2. The retailer's Order Management System (OMS) checks inventory levels at different storefronts and allocates the order to the location which is closest to the customer.
3. Once an order has been sent to the storefront, store staff locate the requested merchandise on the store shelf or back room inventory to pack them for shipping.
4. The package is dispatched for shipping, usually via a local parcel carrier.

What are the advantages of ship from store?

Faster and cheaper shipping

Ship from store strategies typically handle home deliveries within a specific radius of a local store, meaning you only need to focus on the last mile of delivery. However, this is the most expensive and least efficient stage of the order fulfillment process. It requires retailers to shift from batch processing to individual deliveries, which entails higher shipping costs.

With a ship from store strategy, it's not always necessary for completed orders to pile up until a delivery route becomes cost-effective. Regional and crowd-sourced carriers can facilitate short-haul deliveries at a low cost. Where guaranteeing next-day or same-day delivery is usually not possible with a centralized fulfillment strategy, ship from store can guarantee this to local shoppers and enhance the customer experience.

Lower the risk of excess inventory and dead stock

Excess store inventory is a common problem in brick and mortar stores. Most demand forecasting isn't sophisticated enough to pinpoint demand for specific store locations, even though regional tastes and preferences can vary significantly. The result is that specific SKUs can sell out in one location, but pile up in another.

To prevent costly dead stock and free up space for new SKUs, many retailers resort to heavy markdowns, resulting in lower profits and even negative brand equity.

This can be avoided with the ship from store fulfillment strategy that allows you to repurpose idle stock for customers to buy online. This helps to create a more localized inventory strategy tailored to the demands of individual stores. Moreover, leaner and more mobile inventory frees up more space to dedicate to displays and showrooming. 

Overcome warehousing space shortages

The explosion of online sales during the COVID-19 pandemic saw many retailers try to obtain extra fulfillment and warehousing space to manage the increase in online orders. However, this is much easier said than done.

According to Business Insider, the average brick and mortar store needs around 350,000 – 400,000 square feet of warehouse/distribution space to meet its needs, while an online seller needs about 1.2 million. The e-commerce market continues to grow, it's estimated that 1 billion square feet of extra warehouse space will be needed by 2025

When additional commercial space isn't readily available, retailers need to get creative if they're going to meet consumer expectations. As an existing facility and labor resource, physical stores present a solid alternative, without the need for an extensive onboarding process. 

The disadvantages of ship from store

If you plan on implementing a ship from store model, you need to consider that ship from store fulfillment carries its fair share of challenges. If retailers don't work to mitigate these, you may end up achieving faster shipping and delivery at the expense of your in-store operation, which is going to hurt your brand in the long term.

Brick and mortar locations are not purpose-built fulfillment centers

Traditional fulfillment centers are designed to maximize efficiency as much as possible. Everything from pick locations to warehouse shelving is designed to knock precious minutes off the turnaround from order processing to shipping products. Advanced technology solutions such as automation can streamline this process even further.

By contrast, retail stores are designed to be customer-facing. The majority of floor space is dedicated to in-store shopping activities and product displays. This means that backroom space is normally kept to a minimum, which is a big problem for store-based fulfillment.

Even with costly renovations to improve fulfillment processes, ship from store will struggle to match the efficiency of a purpose-built fulfillment facility. If retailers come to rely on shipping from store for too many orders, this could result in a general slowdown of their fulfillment network. 

The in-store experience can be negatively impacted

As many retailers have found out the hard way, store-based fulfillment methods don't always align with an enjoyable in-store experience. In other words: turning your storefront into a warehouse isn't going to impress customers.

Retailers who pivoted to ship from store fulfillment during the pandemic faced significant challenges when reopening their doors to customers. Walmart and Macy's have faced criticism by retail commentators for their apparent prioritization of online orders over in-store shoppers. Issues such as empty shelves and ‘tossed' store displays have escalated as some retail stores become de facto e-commerce fulfillment locations, rather than treated as selling channels in their own right.

For example, if store staff are picking online orders from the same aisles browsed by customers – in effect competing with them to fulfill orders – this adds a lot of friction to the in-store experience. In the worst case, ship from store fulfillment can end up cannibalizing in-store sales if the shopping experience isn't meeting customer expectations.

Staff attention is divided between in-store customers and fulfillment tasks

If ship from store fulfillment can be a difficult balancing act when this is added to your store associates' responsibilities. If staff are expected to serve in-store customers while also picking online orders, they are going to be spread very thin

If your store staff were originally hired for customer-facing roles, pivoting to logistics could be a major challenge. This requires a different set of skills compared to customer service, and not all personnel will be suited to these responsibilities.

Moreover, if in-store customers cannot find a single associate to help them because of a surge in online order volumes, they're not going to hang around. Why? Because you're giving the message that online shoppers are valued more highly than in-store shoppers.

Inventory management becomes more complex

Real-time inventory visibility is essential to ensure that customers aren't placing orders for goods that are currently out of stock. However, ensuring accurate inventory counts within a traditional storefront is much more difficult than in a warehouse. 

Unlike a purpose-built fulfillment center where inventory storage is carefully managed, in-store retail stock is handled by customers daily. Items being picked up and not returned to their original places, garments left in fitting rooms, or even being shoplifted makes it extremely difficult for stores to keep track of their inventory. If they're unable to find an item that a customer has paid for online, this slows down the fulfillment process and may require that order be canceled. 

When is it better to ship from store?

When customers will receive their orders more quickly

The whole purpose of ship from store is to ensure that customers receive their order faster than if it was fulfilled by the distribution center. This means that it won't make sense for certain orders to be eligible for ship from store fulfillment - especially if the store is located a long way from the end customer, as this is likely to result in a slow delivery time. Brands should put certain criteria in place to ensure that only appropriate orders have a ship from store option available, such as the delivery address being located within a certain radius of the store location.

When it saves money on shipping costs

When executed well, ship from store services can help e-commerce brands to lower their shipping costs by allocating online orders to the closest fulfillment location to the end customer. A network of warehouses and ship from store locations ensures that customers are already located close to a fulfillment node, avoiding costly cross-country shipping that crosses multiple zones. However, ship from store should not be used in cases where customer orders will cost more to ship than if they are allocated to purpose-built fulfillment centers, as this can drastically affect an e-commerce brand's bottom line.

When specific locations are designated for ship from store services

Some physical locations will be better suited for ship from store than others. Factors that determine this include proximity to customers, staffing levels, square footage, and access to key transportation routes for speedy delivery services. Stores with a smaller footprint and fewer associates, for example, are more likely to struggle with the demand of fulfilling e-commerce orders, especially if they also offer in-store pickup services. Instead, retail businesses should only offer ship from store in locations that have sufficient space and resources for fulfilling orders quickly and efficiently.

When is it better to ship from a fulfillment center?

When you don't have enough safety stock

If a storefront is fulfilling both online orders and in-person sales, they need to maintain much higher inventory levels to avoid stockouts, especially for popular SKUs. If a storefront is located a long way from distribution centers, this can make it challenging to source more inventory on time, especially during peak times like the holiday season. This increases the likelihood of lost sales, resulting in a customer experience that can push shoppers away from your store.

When you cannot compartmentalize your operation effectively

While there's going to be some overlap between your order fulfillment and storefront operations, you need to keep this to a minimum to avoid negatively affecting the brick and mortar experience. Fulfilling online orders effectively requires dedicated space and storage that caters to the needs and preferences of your online shopper, rather than being retro-fitted on top of a retail location. Likewise, splitting staff into dedicated teams for e-commerce fulfillment and customer-facing services enables you to run a more streamlined operation without interruptions to either online or offline selling.

If your store doesn't have sufficient space or labor to run what are effectively mini distribution centers, then ship from store probably isn't the right strategy for your business. Instead, it makes sense to focus on less intensive online-to-offline activities such as in-store pickup.

When you don't have the right technology requirements

Aside from the physical remodeling of your storefronts, retailers must have the toolkit to manage ship from store orders effectively. This includes:

Unified inventory management. It's impossible to implement ship from store if your inventory is siloed into physical or online channels. To allocate orders and inventory to the most suitable location, there needs to be full visibility and data sharing across storefronts and fulfillment centers. This enables brands to review their inventory levels in real-time and identify what level of demand that different locations are experiencing for different SKUs throughout the year.

Rule-based automation. Being able to set custom rules for order fulfillment enables you to ensure that orders are being fulfilled at the appropriate location if certain criteria are present within an order. For example, if a customer has placed an order with expedited shipping, it may be prudent to allocate it to a proper fulfillment center rather than a storefront if they are better placed to meet tight deadlines. With the right OMS (order management system) you can set an order rule that automatically routes orders involving express shipping to a fulfillment center, meaning you don't have to screen every order manually.

Direct integration between your e-commerce platform and OMS. You should seek out an OMS system that can facilitate seamless two-way integration with your online store. This means that changes to your inventory levels will sync automatically whenever a customer places an order or makes a return. By ensuring inventory accuracy, you can be confident that all orders placed can be fulfilled. 

How Ryder can help

Equipped with decades of expertise and an advanced e-commerce fulfillment platform, Ryder can help make ship from store fulfillment a reality. Our proprietary technology enables businesses to manage their inventory across locations in real time and achieve the ultimate control and flexibility over online orders. Filter, view, and pause orders as required, and even set custom order rules to control packing and routing. We also offer integrations with major e-commerce platforms including Shopify, ensuring that your ship from store fulfillment strategy enhances customer satisfaction and loyalty without sacrificing efficiency or brand experience.