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4 Key Steps to Profitable Store-Based Fulfillment

The dramatic increase in ecommerce volume triggered by the pandemic increased many retailers’ topline revenues, but many are finding it difficult to contain the costs of new types of order fulfillment such as BOPIS, ship-from-store and curbside pickup, according to a report from Incisiv, commissioned by Manhattan Associates Inc.

The survey — a hybrid online and computer-aided telephonic interview (CATI) survey of 140+ U.S. retail executives whose stores offered at least one method of store-based online order fulfillment — revealed that the pandemic triggered a 5X increase in ecommerce volume in 2020 compared to the same period in 2019. Amid this significant shift to online, however, order fulfillment has been a drag on profit margins, according to The New Store Experience Imperatives in High-Touch Retail. The report also identified the need for retailers to create frictionless customer experiences across physical and digital touch points.

“The ecommerce uptick of the last 12 months has necessitated a realignment of how retailers approach leveraging store associates, locations and inventory,” said Kevin Swanwick, VP, Store Solutions at Manhattan Associates in a statement. “Associates became pickers and shippers; stores turned into mini-fulfillment centers and in-store inventory was increasingly made available online.”

As the pandemic’s impact continues to accelerate the transformation of brick-and-mortar retailers, the research revealed some key findings for retailers looking to chart a path to success in a post-pandemic world:

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  • Retailers must make store-based fulfillment more profitable. Thesignificant growth in BOPIS, curbside pickup and other modes of fulfillment has squeezed margins: 79% of surveyed retailers said the profitability of orders fulfilled from stores was reduced somewhat or significantly between Q1 and Q2 2020. With 80% of shoppers expecting to increase their use of BOPIS and curbside pickup over the next six months, it’s critical that retailers identify and address the inefficiencies in order to improve profitability. 
  • Give store associates the tools they need for digital interactions with customers. 80% of shoppers said they were likely or very likely to have digital interactions with store associates over the next six months — yet 54% of retailers don’t currently equip their associates with the digital tools to reach out via email, text or social media, and 81% do not enable store associates to contact a customer about an online order.
  • A frictionless return experience is critical. The survey found that returning an item ranked as the No. 2 motivator for future store visits by customers, second only to the need for same-day products. However, 60% of retailers surveyed do not allow shoppers to return or exchange an item during checkout, adding an unnecessary obstacle to flipping the return interaction from a loss to a profit. 
  • In-store inventory management needs to match warehouse accuracy. 85% of surveyed retailers ranked inventory accuracy as a top priority to improve BOPIS and curbside pickup options. Retailers faced challenges with in-store inventory numbers that were not nearly as accurate as warehouse numbers.

“Brick-and-mortar retailers still hold an important place in the evolving retail landscape, and how well brands embrace these changes to the store footprint will directly impact their overall profitability,” said Gaurav Pant, Chief Insights Officer of Incisiv in a statement. “We recommend retailers focus on delivering safe, convenient in-store order fulfillment options. Equally important is enabling associates to communicate with shoppers digitally and providing a high-quality, consistent cross-channel experience.”

View the Point-of-Sale Software for High-Touch Retailers Buyers’ Guide to learn more about the report.

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