A SPECIAL SUPPLEMENT TO DC VELOCITY S-5
indirect sales.
Not surprisingly, the study indicated that the Internet
has become a primary sales channel for consumer goods. Eighty-two percent of survey participants
were selling products online, while only 70 percent
were engaged in traditional brick-and-mortar retailing.
Another 52 percent said they did either call center or
catalog selling. (Respondents were allowed to select
more than one option.)
As to how they’re handling fulfillment of e-commerce orders, 57 percent are using stock from distribution centers that support both e-commerce and
store replenishment. Another 37 percent are taking
merchandise from store shelves, while 32 percent use
a Web-only DC. (See Exhibit 1.)
When it comes to who operates those e-commerce
distribution centers, 17 percent outsource the operations to a third-party logistics (3PL) company. Still,
the majority—62 percent—run their own facilities
for e-commerce pick-pack-and-ship, while another 21
percent use a combination of company-owned and
outsourced facilities.
Retailers are embracing the “common pool of inventory” concept, meaning they use any available inventory, no matter the location, to fill both online and
store orders. Exactly half the respondents—50 percent—share direct sales inventory across all channels.
Another 32 percent said they had plans to move in that
direction.
As for how retail outlets fit into the e-commerce
fulfillment picture, the study indicated that stores play
a variety of roles. Eighty-six percent of respondents
that use retail outlets to fill online orders said they
picked and shipped online orders from stores. Another
68 percent picked orders and held them at the store
for customer pickup, while 45 percent had their DCs
ship merchandise to the store for customer pickup.
(Respondents were allowed to select more than one
option.)
For online orders picked from retail outlet stock, 90
percent of respondents said they selected items from
the front of the store and 71 percent pulled items
from the backroom. As for how store management is
communicating information on what items to pick, the
majority—71 percent—are using a paper-based meth-
od to convey instructions to order selectors. Thirty-
eight percent are using some type of radio-frequen-
cy communication, although some of those respon-
dents are doing so in conjunction with a paper-based
ABOUT THE STUDY
This year’s omnichannel study was conducted by
DC VELOCITY and CSCMP’s Supply Chain Quarterly
magazines in conjunction with ARC Advisory
Group. ARC analysts Clint Reiser and Chris
Cunnane conducted the survey and compiled
the results. The 2014 study builds on research
done last year in this area, which found that
stores were the weak link in omnichannel dis-
tribution. Compared with last year’s survey, this
year’s study delved more into the details of DC
operations to support omnichannel initiatives.
It’s important to note that the findings reported here are based on 60 responses deemed
valid because of the respondents’ direct involvement in omnichannel distribution operations.
The valid responses were culled from nearly 200
replies to a questionnaire sent this summer to
readers of DC VELOCITY and Supply Chain Quarterly
as well as to select ARC client lists.
As for the demographic breakdown, the
majority of respondents (52 percent) came from
the retail sector. Another 37 percent came from
manufacturing, and the remaining 11 percent
from other sectors. Although the participants
represented a broad swath of industries, the
largest share (18 percent) came from the apparel
business. The next largest segments were food/
beverage and computers/electronics, each at 13
percent.
A report containing a more detailed examination of the omnichannel survey results is available from ARC for a fee. For information, visit
www.arcweb.com/pages/info-request.aspx.
