respondents did note that they believed their companies
needed a real-time inventory system for the store.)
That failure to take advantage of modern tracking technologies could cause major headaches down the road. Lack
of real-time visibility of store-level inventory could result in
high customer dissatisfaction rates for retailers who offer
shoppers the option to order online and then pick up their
orders at the store. Furthermore, the study suggested retailers may not be fully aware of the risks. Sixty-seven percent of
the retailers participating in the survey indicated they did not
understand the impact of order fulfillment mistakes on customer retention and loyalty.
The study also examined how quickly retailers were getting
merchandise ordered online and shipped from their stores
into customers’ hands. Six percent of respondents said they
could guarantee delivery in four hours, and 21 percent said
they guaranteed same-day delivery from a store location.
However, most respondents – 34 percent – said a store-origi-nated shipment would arrive the next day. Another 21 percent said they guaranteed two-day shipping, and the remainder – 17 percent – said they were unable to commit to a delivery time of less than three days.
As for how retailers are getting online orders filled at the
store into customers’ hands, 80 percent rely on parcel carriers
for the task. Fifty-one percent are doing “drop shipping” with
partners, while 43 percent use third-party logistics delivery
services as partners. Of note was the fact that 31 percent
engaged couriers and another 21 percent relied on a store
fleet. Three percent reported that the store staff was making
deliveries either with their own vehicles or by travel via subway or on foot. (Respondents were allowed to select multiple
responses to this question.)
Respondents were also asked what key technologies were
on their wish lists, with regard to supporting their omnichannel commerce efforts. At the top of the list was distributed
order management software, cited by 48 percent of survey
participants. These applications are designed to identify the
best fulfillment location for a particular order. Second on the
list, cited by 39 percent, were applications that calculate total
landed costs (in other words, all of the expenses incurred in
moving a shipment to a destination). Third on the list, cited by
38 percent, was inventory optimization software, applications
that determine optimal stocking levels for all of the various
locations in the supply chain. Eight percent said they already
had all the technologies necessary for the job. (See Exhibit 4.)
STORE TRANFORMATION REQUIRED
All in all, our study indicates that retailers need to get a better
grasp of what’s involved in order fulfillment and shipping
from store locations. Accurate fulfillment for online orders
EXHIBIT 2
WHAT OMNICHANNEL CAPABILITIES DO
RESPONDENTS SUPPORT?
Omnichannel capabilities
currently supported
Return to store, even when goods
are ordered online
Order at store, fulfill from warehouse
Order online and pick up in stores
Pick orders at store for home delivery
Order at store, fulfill from another store
Parcel return, even when goods were
bought in a store 36%
Order online and pick up at a location
other than your stores 14%
Percentage
73%
69%
53%
43%
36%
EXHIBIT 3
HOW WELL DO RESPONDENTS
UNDERSTAND THEIR COSTS?
Do you understand what it costs to
fulfill omnichannel orders?
The costs of “each” picking by SKU or
product class in an e-commerce DC
Transportation costs by SKU or product
class for deliveries from an e-commerce DC
Value-added services associated with
e-commerce orders at a DC
Transportation costs by SKU or product
class for deliveries from a store
The costs of returns, by product, for
omnichannel orders
The costs of “each” picking by SKU or
product class in the back room of a store
The costs of “each” picking by SKU or
product class in the front of the store
Value-added services associated with
store pickups or home deliveries fulfilled
from the store
Percentage
78%
70%
59%
57%
49%
38%
29%
27%
picked up at the store will demand either accurate store level
inventory or use of inventory “slush funds.” That could also
necessitate long leadtimes to protect against the inability to
accurately execute picking activities. At the moment, store
fulfillment activities, largely under the control of store opera-
A SPECIAL SUPPLEMENT TO DC VELOCITY S-7
