As retailers continue on the journey toward meeting consumers' omnichannel order fulfillment expectations-and doing so in a cost-effective manner-the brick and mortar store is emerging as a key enabler. Increasingly, merchants are leveraging their stores as miniature distribution centers from which online orders are picked, packed, and shipped, or prepared for in store pickup. In fact, Target.com president Jason Goldberger recently revealed that as of June 2015, a quarter of all digital orders placed at Target.com are picked up at or shipped from a store.
What's more, some early concern about the operational challenges associated with store-level fulfillment of online orders has been addressed, in part by the dynamics of the very consumer population creating the demand. The majority of online orders are placed between noon and 10:00 PM, with a conclusive peak at the noon hour.2 This gives properly-equipped store personnel ample time to pick, pack, and prepare orders for next-day shipping at a marginal cost within the existing framework.
Most retailers have learned, however, that store-level fulfillment of online orders requires improvement of inventory accuracy to accommodate allocation optimization. No merchant wants to sacrifice on-shelf availability to online demand.
As omnichannel rapidly matures, RFID (radio frequency Identification) has been called back into action to serve on the front lines in the battle for inventory accuracy. Several leading retailers have announced plans for RFID adoption to support their omnichannel inventory initiatives. Supply chain intelligence gleaned via RFID informs the store allocation decisions that ensure the necessary presentation and buffer stock at the store level. It also holds great potential for supporting smarter decisions regarding last-mile logistics in buy online/ship-from-store and pick-up in-store scenarios. RFID provides the store level inventory visibility that supports a quick and seamless receiving/pick/pack/ship effort at stores.
UPS offers multiple solutions to assist merchants of all sizes with the implementation of the new processes necessary to support last-mile omnichannel logistics. Consultation services from UPS Customer Solutions include a time study, in which UPS retail logistics experts monitor store operations and aid in the design of an omnichannel logistics approach that's minimally disruptive to store operations. That design might include the merchant's existing systems, shipping tools from UPS, inventory visibility, OMS (order management system), and WMS (warehouse management system) solutions from any number of UPS Ready® certified integrators and software partners, or a combination thereof.
UPS Customer Solutions also uses a Network Optimization tool that can help merchants choose the best store location to pick and pack online orders, ensuring the best coverage at the least cost. The software solution collects and analyzes ordering patterns, inventory standing and location, price history, and consumer location data to arrive at the most economical approach to last-mile logistics. In addition to the assurance that shipping costs are held to a minimum, the approach helps retailers protect in-store inventory levels for walk-in consumers while optimizing full price sales through markdown avoidance.
While facilitating store-level omnichannel fulfillment and logistics requires some degree of process and technology change, it's becoming a modern retail consumer experience imperative.
1 UPS Pulse of the Online Shopper™, 2015
2 Infinite Analytics
70% of shoppers who return an item in store have made a new purchase.
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