It is no secret that e commerce channels and online sales are a rapidly growing force in the retail sector. In fact, JDA predicts that by 2015, e commerce channels will be responsible for nine percent of total US retail sales. With online sales becoming such a prominent power force, retailers are beginning to think outside the box and come up with ways to better handle their online orders. One unique and emerging trend? Using in store inventory as a way to fulfill online orders.
But is it all rainbows and sunshine? Not just yet. There are many hurdles that retailers have to face when implementing this new method of order fulfillment. One of the biggest challenges that retailers are noticing might be surprising: accurate inventory tracking. Making sure that inventory is properly tracked is key so that the computer software systems can accurately determine which brick and mortar location should be responsible for shipping the items, and also, so that store employees can locate the items for shipment and fulfillment. How are companies dealing with this obstacle? You might be surprised! RFID Journal reports that retail giant Macy's, (who plans to make it possible for up to one third of it's retail locations to fulfill online orders) is going to begin attaching RFID tags to it's products by the end of 2012 to make it easier for products to be located and constantly monitored in store.
The premise is simple: take advantage of this new influx of online orders using excess stock that is already on hand at brick and mortar stores. The advantages are many. Retailers can avoid making dreaded markdowns on products that might be slow to sell at their brick and mortar stores, by selling them at full price through their e commerce channels. Customers get their orders faster, and for lower shipping costs, since products have less distance to travel. This, in turn, increases customer satisfaction and improves customer service. Retailers sell more products, since they can now sell product that was out of stock online, but is still on the shelves at their retail locations.
This concept of using stores as yet another fulfillment node within the supply chain has evolved over time. Online ordering was first to hit the scene,and while customers initially enjoyed this new and exciting way to get the products they wanted, they continued to crave even more convenience. Since then, many stores have adopted "in store pick up" programs, or "ship to store" programs, where customers place their orders online and then pick them up at retail locations. Many experts agree that "ship from store" programs are the next logical extension of these "buy online, pick up in store" models.
Retailers are also having to rethink their employee training methods and ensure that their employees understand their new duties in order fulfillment as well. It can be difficult for some employees to multi task between their on-floor duties in the retail store, and their new online order fulfillment duties. New workforce management techniques are also important to ensure that there are enough employees on duty at any given time to handle the day to day tasks of running the retail store along with the added stressor of fulfilling online orders. This can be exceptionally important during busy times for both retail and online shopping, such as the holiday season.
That being said, the retailers that are finding the most success in processing online orders in-house are the ones who have already made the leap from simple online ordering to a "order online, pick up in store" business model. As previously mentioned, Macy's plans to outfit one third of it's retail locations to process online orders, according to The Wall Street Journal. Toy giant Toys "R" Us made the leap to fulfilling online orders at more than 750 of their brick and mortar locations late last year. The New York Times recently ran an article that explains how Nordstrom's was the one to pave the way for this sort of business model, implementing "ship from store" capabilities in more than 100 of their stores way back in 2009. It seems obvious to us that the trend is just catching on, with more stores sure to follow suit soon. As customers yearn for more and more convenience in online ordering, and want to get their products faster, easier, and cheaper, retailers fulfilling orders with stock from brick and mortar stores just makes sense.