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As the retail landscape becomes increasingly competitive, leveraging technology for a strategic edge is vital. Among these innovations, the "ship from store" model stands out as a game-changer, offering retailers the chance to utilise their stock points across various channels effectively.
What is ship from store?
"Ship from Store" is a technique borne from this multi-channel strategy, allowing retailers to dispatch orders directly from physical stores instead of traditional distribution centers.
This approach hinges on creating a unified inventory that combines stock from warehouses, distribution centers, and physical stores, ensuring flexible logistics and the ability to fulfill online orders from any location.
The advantages of "Ship from Store"
Key benefits include:
- Increased product availability: By tapping into the inventory of all stores, retailers can minimise lost sales and stockouts. For instance, stores with larger physical spaces often have more stock than central warehouses, making them ideal for augmenting e-commerce offerings.
- Expanded product range: Utilising store inventories can enable retailers to offer products not available in distribution centers.
- Reduction in unsold inventory: Selling from store stock through various channels simplifies the liquidation of inventory, thus decreasing unsold items and associated costs.
- Faster delivery times: Implementing a "ship from store" model can significantly shorten delivery times, particularly in last-mile logistics.
To capitalise on this strategy, retailers need to embrace a reimagined supply chain management process where each store becomes a pivotal link in fulfilling online orders.
How does "Ship from Store" work?
Key components of this approach include:
- Order management systems: These systems are crucial in offering a unified inventory across sales channels and managing product availability.
- Orchestration rules: Retailers need flexible strategies to determine how orders are allocated, considering factors like delivery distance, inventory levels, store attributes, and seasonal demands.
- Order assignment strategies: These rules define how each order is assigned to a particular warehouse, store, or distribution center.
- Store notification and fulfillment: Stores receive notifications about new orders, and staff use specialized applications to fulfill these orders, prepare parcels, and manage shipping.
- Carrier picking: Carriers collect orders directly from stores, either on a regular schedule or on-demand.
Challenges and solutions in "Ship from Store"
Implementing "ship from store" is not without its challenges, which require strategic solutions:
- Store design adaptation: Stores need to be reconfigured for order preparation and delivery handling.
- Optimising store fulfillment rates: Retailers must account for the unique challenges of store-based fulfillment, such as varying associate availability and inventory accuracy.
- Safety stock and assignment strategy: Setting aside a safety stock for each item and choosing the right order assignment strategy are critical for managing inventory and fulfilling orders efficiently.
- Order capping and store quality of service (QoS): Implementing mechanisms like order capping and evaluating stores based on their fulfillment performance can enhance overall efficiency.
- Notification mechanisms and fulfillment optimisation: Diversifying notification methods and streamlining the fulfillment process, possibly through external service providers, can improve store performance.
- Carrier strategy and change management: Selecting appropriate carriers and thoroughly integrating stores into the implementation process are essential for a seamless transition.
- Financial compensation: Recognising the role of stores in the supply chain, especially franchises or cooperatives, and ensuring appropriate compensation is crucial.
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Conclusion
In conclusion, "ship from store" offers significant advantages to retailers by optimising their existing network and inventory. Those who effectively address the associated challenges can see a marked increase in turnover and product availability across all channels, proving the value of this innovative approach in today's dynamic retail environment.
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