DC Velocity - November 2015

MEANWHILE, BACK AT
THE STORE …

Of course, one of the more distinctive aspects of omnichannel commerce is that many purchases are never processed or shipped from warehouses at all, but are handled directly through retail stores.

To better understand how retail outlets fit into the picture, we asked survey respondents which fulfillment-related activities they carried out at their store locations. Sixty-eight percent of the respondents who fill at least some orders from stores said e-commerce orders were both picked and shipped from the store, while 64 percent said the orders were picked at the store and then held for customer pickup. A smaller percentage— 47 percent— said they shipped e-commerce orders from a DC to the store for customer pickup.

That raised another issue: whether the retailers’ employees picked the items from the stockroom or the showroom. The responses were pretty evenly divided, with 71 percent saying they picked orders from the back of the store and 64 percent from the front.

Finally, we dug even deeper, asking what methods stores used to communicate order information to the workers who picked those orders. The answers showed that stores lag well behind warehouses and DCs when it comes to the adoption of fulfillment technology, since the most popular reply was the paper-based method, with 56 percent. Trailing far behind were radio-frequency (RF) gun with textual display ( 26 percent), RF gun with graphical display (also 26 percent), and some other mobile device ( 15 percent).

THE ECONOMICS OF OMNICHANNEL

Despite the rapid growth of omnichannel commerce, our survey also revealed that e-commerce revenue has a long way to go before it eclipses brick-and-mortar sales income.

We asked survey respondents what percentage of
their direct retail revenue—revenue from items sold
to consumers through their own sales platforms, as
opposed to being moderated by a retail partner—
currently came from each channel. The average for
brick and mortar was 63 percent, far above online
and mobile ( 24 percent), and call center and catalog
( 15 percent). (See Exhibit 5.)

Despite the modest revenue generated through online, mobile, call center, and catalog sales, a solid majority of respondents had sales operations up and running in every channel. When asked to list all the channels in which they currently receive direct retail orders, respondents cited online (84 percent), brick and mortar (76 percent), call center and catalog ( 57 percent), and mobile ( 46 percent).

Taken together, the survey results indicate that omnichannel retailing is here to stay, but that fulfillment practices remain in flux. In particular, our study points to changes ahead in the area of parcel delivery. Stay tuned for next year’s survey, when we track the further progress of these trends that are revolutionizing the industry.